Abu Dhabi sells Us$10bil stake in pipelines to Gip-led group

ABU DHABI: Abu Dhabi sold a Us$10.1bil stake in its natural gas pipelines to a consortium led by Global Infrastructure Partners, in the biggest infrastructure acquisition so far this year.

The investors, including Brookfield Asset Management Inc and Singapore’s sovereign wealth fund, will buy a 49% holding in a new subsidiary for the pipelines from Abu Dhabi National Oil Co, which will retain the rest of the shares, the state-owned energy producer said in a statement Tuesday.

Infrastructure has been one of the few bright spots for dealmakers since the coronavirus outbreak led to a sharp downturn in mergers and acquisitions. The volume of such deals increased in the first quarter by almost 20% year-on-year to Us$81bil, according to data provider Preqin.

The Adnoc transaction values the pipelines at Us$20.7bil. It surpasses KKR & Co’s agreement in March to buy the waste-management arm of UK utility Pennon Group Plc for £4.2bil, and Portuguese oil company Galp Energia SGPS SA’S plan to sell its gas-distribu

€1.5bil. tion assets for as much as

The pipelines deal will bring cash into Abu Dhabi, the capital of the United Arab Emirates, as it grapples with this year’s almost 40% plunge in crude prices.

It’s the largest transaction in the emirate’s three-year push to use energy assets to attract foreign direct investment.

“Given the global economic climate, it is a great endorsement of Adnoc and the UAE’S world-class assets,” Adnoc chief executive officer Sultan Al Jaber said in an interview with Bloomberg Television.

The 38 pipelines involved in the deal span almost 1,000 kilometers (621 miles). Adnoc will lease the network for 20 years and pay a tariff based on the amount of gas it transports throughit.

The subsidiary, Adnoc Gas Pipeline Assets, will distribute all its free cash to the investors through quarterly dividends.

As well as GIP, Brookfield and Singapore’s GIC Pte, the consortium comprises Ontario Teachers’ Pension Plan, NH Investment & Securities Co of South Korea and Italian gas-network operator Snam SPA.

Abu Dhabi has been opening up its energy industry as it tries to generate additional sources of funding. Adnoc has sold shares in its distribution unit and brought international investors into its refining and oilfield servicing arms. KKR and Blackrock Inc. agreed last year to invest Us$4bil in Adnoc’s oil pipelines. GIC later bought a stake in the business.—