ADNOC closing landmark deal to sell 49% stake in pipeline business

Abu Dhabi National Oil Co. – ADNOC is closing in on a deal with investors supported by Global Infrastructure Partners and Brookfield Asset Management Inc for a 49% stake sale in its pipelines. A deal, which could be the biggest sector deal of the year is expected to value the pipelines at more than $15 billion, including debts. 

Provisions for equity financing have been provided and the suitors are mediating the terms of a debt package with lenders. Even though the discussions are in an advanced state and open, the declaration and valuation could still vary.

The GIP consortium which is expected to close the deal this month includes Italian infrastructure operator Snam SpA, Ontario Teachers’ Pension Plan, Singapore sovereign fund GIC Pte and South Korea’s NH Investment & Securities Co.

All partakers have either declined or refused to reveal any information now

Unaffected by the slump

Infrastructure investors have been daring the transaction downturn caused by the coronavirus pandemic to invest the capital. The ADNOC transaction could exceed KKR & Co.’s deal in March to acquire the waste-management arm of U.K. utility owner Pennon Group Plc for $5.2 billion. It could also better the deal by Portugal’s biggest oil company, Galp Energia SGPS SA, to trade its gas distribution assets for a figure estimated to be close to $1.7 billion.

Abu Dhabi has been introducing the operations of its state-owned oil producer to foreign partners as part of a drive to broaden its economy and create supplementary origins of funding. ADNOC has already traded stakes in its distribution unit and dealt with international investors to its refining and oil field services business. KKR and BlackRock Inc. agreed last year to spend $4 billion in ADNOC’s oil pipeline network. GIC bought a stake in the business later.

The United Arab Emirates, of which Abu Dhabi is the capital, isn’t the only Persian Gulf oil producer that is utilizing its energy assets to bring fresh capital to the area. In Saudi Arabia, ARAMCO, the world’s largest oil producer, is also considering the trade of a stake in its pipeline unit to gather money amid the drop in crude prices.

The GIP consortium was soliciting a loan of about $8 billion to fund the potential acquisition of the stake in the gas pipelines and reached out to lenders to assess their interest in participating.