GIP and Brookfield near $15bn Abu Dhabi pipeline deal

Global Infrastructure Partners and Brookfield Asset Management are close to taking a stake in the Abu Dhabi National Oil Company’s natural gas pipelines, according to people familiar with the matter.

Under the deal the investors would take a 49 per cent share worth more than $15bn including debt, the people said.

The discussions have been under way for months but a deal now would come just as resource rich-nations are hit by the drop in energy prices and revenues triggered by the coronavirus pandemic. 

Adnoc has sold stakes worth billions of dollars in energy infrastructure in recent years as Abu Dhabi seeks to privatise assets to diversify funding streams and attract foreign capital to the emirate’s energy company. This deal would be part of Abu Dhabi’s established revenue maximisation strategy, said one of the people.

GIP and Brookfield are investing as part of a consortium that is in talks with lenders about financing the acquisition, with negotiations for an $8bn loan “almost complete”, according to another of the people. 

Other members include Italian energy infrastructure company Snam, Ontario Teachers’ Pension Plan, Singapore’s sovereign wealth fund GIC and NH Investment & Securities of South Korea. 

The latest deal, which was first reported by Bloomberg, comes as Abu Dhabi is trying to speed up its transition away from oil revenues, with the government seeking to diversify its economy for the longer term amid growing uncertainty about future crude demand.

The emirate has sought to manage Adnoc’s asset base in a more commercially oriented manner, seeking to squeeze out savings and value from across the business. At the same time, private equity investors and asset managers are eyeing long-term, secure dividends. 

KKR and BlackRock agreed in 2019 to invest $4bn in Abu Dhabi’s oil pipelines as the Gulf producer opened itself up to institutional capital.

Private equity firms have been willing to strike infrastructure deals, seen as a steadier source of revenue, even as other dealmaking has largely dried up in the wake of the coronavirus crisis. 

KKR in March agreed to buy UK recycling group Viridor in a £4.2bn deal, one of the first large transactions to be agreed after the outbreak of the pandemic, saying the business was “incredibly resilient [and] incredibly defensive”. 

Adnoc declined to comment. GIP and Brookfield did not immediately respond to requests for comment. 

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