Iberdrola to Sell UK Smart Metering Business

By Andres Gonzalez

LONDON (Reuters) – Spanish utility Iberdrola (OTC:IBDRY) aims to sell its smart metering business in the UK and has lined up advisers, according to three sources familiar with the situation, seeking to capitalize on increased investor interest in the sector.

Iberdrola is looking to raise around £1 billion ($1.27 billion), one of the sources said.

The sale process is at an early stage, and no deal is guaranteed. Iberdrola is working with RBC as an adviser on the deal. Both Iberdrola and RBC have declined to comment.

In October, Iberdrola made public a £24 billion investment plan for its British arm, Scottish Power, until 2028, with around two thirds of the amount allocated to power transmission and distribution networks.

One source indicated that proceeds from the smart metering business sale would help finance this investment plan.

According to the 2023 accounts published on its website, ScottishPower manages over 2.5 million smart meters through its unit SP Smart Meter Assets Limited. At the end of September, 37 million smart and advanced meters had been installed in homes and small businesses across Great Britain, per the UK's Department for Energy Security & Net Zero.

As the adoption of smart meters increases, so has interest from infrastructure funds in the sector. Earlier this month, private equity firm EQT and Singapore's sovereign wealth fund GIC acquired a majority stake in smart metering provider Calisen, while Arcus' Horizon Energy Infrastructure merged with KKR's Smart Metering Systems (SMS).

Smart meters provide real-time information on electricity consumption, helping households and suppliers save money.

In August, Iberdrola agreed to buy a majority stake in British power network Electricity North West (ENWL), valuing the company at approximately €5 billion, thus expanding the Spanish group's operations in Britain.

While the renewable sector has faced challenges with high interest rates and debt costs, Iberdrola has focused on upgrading and expanding power grids, such as those controlled by ENWL, which promise steady and predictable returns.

($1 = £0.7845)