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Abu Dhabi’s Adnoc sells $10bn stake in pipelines to GIP-led group

Abu Dhabi offered a $10.1 billion stake in its natural-gas pipelines to a gaggle of six buyers together with International Infrastructure Companions, Brookfield Asset Administration and Singapore’s sovereign wealth fund, within the largest infrastructure acquisition to this point this 12 months.

The consumers can have a 49% holding in a brand new subsidiary for the pipelines arrange by Abu Dhabi Nationwide Oil Co., which can retain the remainder of the shares, the state-owned power producer mentioned in a press release Tuesday.

Infrastructure has been one of many few shiny spots for dealmakers for the reason that coronavirus outbreak led to a pointy downturn in mergers and acquisitions. The amount of such offers elevated within the first quarter by nearly 20% year-on-year to $81 billion, based on information supplier Preqin.

The Adnoc transaction values the pipelines at $20.7 billion. It surpasses KKR & Co.’s settlement in March to purchase the waste-management arm of UK utility Pennon Group Plc for 4.2 billion kilos ($5.2 billion), and Portuguese oil firm Galp Energia SGPS SA’s plan to promote its gas-distribution belongings for as a lot as 1.5 billion euros ($1.7 billion).

The pipelines deal will convey money into Abu Dhabi, the capital of the United Arab Emirates, because it grapples with this 12 months’s almost-40% plunge in crude costs. It’s the biggest transaction within the emirate’s three-year push to make use of power belongings to draw overseas direct funding.

“Given the global economic climate, it is a great endorsement of Adnoc and the UAE’s world-class assets,” Adnoc Chief Government Officer Sultan Al Jaber mentioned in an interview with Bloomberg Tv.

The 38 pipelines concerned within the deal span nearly 1,000 kilometres (621 miles). Adnoc will lease the community for 20 years and pay a tariff based mostly on the quantity of gasoline it transports by way of it. The subsidiary, Adnoc Gasoline Pipeline Belongings, will distribute all its free money to the buyers by way of quarterly dividends.

In addition to GIP, Brookfield and Singapore’s GIC Pte, the consortium contains Ontario Academics’ Pension Plan, NH Funding & Securities Co. of South Korea and Italian gas-network operator Snam SpA.

Abu Dhabi has been opening up its power business because it tries to generate further sources of funding. Adnoc has offered shares in its distribution unit and introduced worldwide buyers into its refining and oil-field servicing arms. KKR and BlackRock Inc. agreed final 12 months to take a position $Four billion in Adnoc’s oil pipelines. GIC later purchased a stake within the enterprise.

These earlier steps to boost money, together with efforts at chopping prices, make Adnoc “far stronger and better positioned to manage the current market dynamics and price fluctuations,” Al Jaber mentioned.

Abu Dhabi isn’t the one Persian Gulf oil producer promoting power belongings. Saudi Arabia listed shares in Saudi Aramco for the primary time in December. The corporate, the world’s largest oil exporter, has additionally requested advisers to check a sale of a part of its pipeline unit.

Adnoc was suggested by Financial institution of America Corp., First Abu Dhabi Financial institution PJSC, Mizuho Monetary Group Inc and Moelis & Co.

The consumers are searching for a mortgage of about $eight billion to fund the transaction, Bloomberg reported in April.

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By Punit Nirankari

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