A group of international investors is buying a stake in ADNOC’s gas pipeline assets, which are valued at $20.7 billion.
The investor group includes Global Infrastructure Partners (GIP), Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board (Ontario Teachers), NH Investment & Securities and Snam.
The consortium will buy a 49% stake in a new subsidiary, ADNOC Gas Pipeline assets. This will have lease rights to 38 pipelines, covering 982 km. ADNOC will hold the remaining 51%. The unit is valued at $20.7bn, valuing the 49% stake at $10.14bn.
ADNOC will lease the pipelines to the ADNOC Gas Pipelines unit for 20 years. In return, it will receive a volume-based tariff, on which there is a floor and a cap.
Tariffs will be charged on the sales gas and natural gas liquids (NGLs) that flow through the pipelines. The subsidiary will distribute 100% of its free cash to investors via quarterly dividends.
The sale will see more than $10bn go to ADNOC upfront. The company will retain management and responsibility for operational and capital expenditures.
In return, the consortium will receive stable cash flows with a low risk profile, ADNOC said.
“Today’s landmark investment signals continued strong interest in ADNOC’s low-risk, income-generating assets, and sets another benchmark for large-scale energy infrastructure investments in the UAE and the wider region,” said ADNOC’s CEO Sultan Al Jaber.
“It solidifies ADNOC’s position as an attractive partner and reinforces the UAE’s track record as the region’s go-to foreign direct investment destination, even during the current unprecedented circumstances.”
The chairman and managing partner of GIP Adebayo Ogunlesi said the gas network was “a core piece of midstream infrastructure in the UAE and this transaction presents a unique opportunity to invest in an asset of this quality and importance, while also supporting ADNOC in their smart growth strategy.
“This transaction underscores GIP’s strategy of investing in high quality infrastructure assets and developing long term strategic partnerships with industry leaders.”
The deal matches a similar deal in February 2019, under which KKR and BlackRock invested in ADNOC’s oil pipelines. The private equity groups invested around $4bn upfront and received a 40% stake in the oil pipeline unit.
Updated at 12:31 pm with clarification on the value of ADNOC Gas Pipelines and the amount paid by the consortium.