Outlook: NatGrid/Energis

NATIONAL GRID was once an unrecognised and unloved organisation, a hidden treasure buried within the 12 regional electricity companies that owned it. Eventually the City and the Government realised it might be worth something and forced a demerger. The years passed and then all of a sudden it emerged that there was another treasure lying Russian doll- like inside the Grid - a telephone company that ran its cables along the Grid's electricity pylons. They called it Energis and floated a quarter of its equity on the stock market.

This was always going to be a controversial means of value recognition. Why not follow your own path to stock market independence, free market purists asked, and simply demerge Energis? All kinds of ingenious excuses were tabled, but essentially it came down to this quite basic line of reasoning -- because National Grid, having given birth to Energis, wanted to keep some of the potential upside in the stock for itself.

In a way, it has been proved correct. The telecoms sector has soared and with it, Energis. The Grid's remaining 75 per cent stake has come to account for more than 40 per cent of its total stock market value, and everyone, the Grid's management included, has been able to bask in its warm glow. Time, then, to sell some more. Fortunately for the Grid, there can be no question of a demerger this time round. Having already sold some of the company, the tax implications would be horrendous.

But essentially it is still the same old thing. David Jones, the Grid's laconic chief executive, just cannot let go. The Grid's bankers are even creating a convertible bond, backed by the Grid's own cash flow, to allow the Grid to participate in the potential upside of the shares they are selling. Since disposing of another 25 per cent will allow Energis to qualify for the FTSE 100 Index, this could be quite considerable.

Given how much money he's made for his investors, nobody's going to quarrel too much with Mr Jones about all this. Who knows? There may be another Russian doll or two yet to be moulded out of the pounds 1.2bn the Grid will receive from this latest sale.

All the same, there is a certain lack of logic about the Grid's position. As quickly as it sells out of Energis, it is investing in exactly the same sort of telecom ventures elsewhere, most recently in Brazil. There is an obvious conflict of interest here that won't finally be resolved until the G

rid is out of Energis altogether.

PROMOTED VIDEO
Arts and Entertainment
tv
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Your picture is everything in the shallow world of online dating
i100
Life and Style
Attractive women on the Internet: not a myth
techOkCupid boasts about Facebook-style experiments on users
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
football
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

HR Business Partner (Maternity Cover 12 Months)

£30000 - £34000 Per Annum 25 days holiday, Private healthcare: Clearwater Peop...

Business Analyst - London - Banking - £400-£450

£400 - £450 per day: Orgtel: Business Analyst - Credit Risk - Banking - London...

Project Manager,Conduct Risk,London,£5-600pd

£500 - £600 per day + competitive: Orgtel: My client, a leading bank, is curre...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on