Abu Dhabi sells US$10b stake in pipelines to GIP-led group

Abu Dhabi

ABU Dhabi sold a US$10.1 billion 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 per cent holding in a new subsidiary for the pipelines from Abu Dhabi National Oil Co (Adnoc), which will retain the rest of the shares, the state-owned energy producer said in a statement on 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 per cent year-on-year to US$81 billion, according to data provider Preqin.

The Adnoc transaction values the pipelines at US$20.7 billion. It surpasses KKR & Co's agreement in March to buy the waste-management arm of UK utility Pennon Group Plc for £4.2 billion (S$7.3 billion), and Portuguese oil company Galp Energia SGPS SA's plan to sell its gas-distribution assets for as much as 1.5 billion euros (S$2.4 billion).

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 per cent 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.

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"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 kilometres. Adnoc will lease the network for 20 years and pay a tariff based on the amount of gas it transports through it. 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, the consortium comprises Ontario Teachers' Pension Plan, NH Investment & Securities Co of South Korea and Italian gas-network operator Snam SpA. BLOOMBERG