Home Commodities GIP and Brookfield among investors in $10bn Abu Dhabi pipeline deal

GIP and Brookfield among investors in $10bn Abu Dhabi pipeline deal


Abu Dhabi National Oil Company has drawn a $10.1bn investment in its gas pipelines business to a consortium including Global Infrastructure Partners and Brookfield, as the state group steps up its push to attract overseas capital.

Adnoc on Tuesday said the deal valued the network at $20.7bn and marked the region’s largest energy infrastructure investment.

“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 Sultan Al Jaber, Adnoc chief executive.

The international consortium also includes Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan, NH Investment & Securities of South Korea and Italian energy infrastructure company Snam.

It will acquire a 49 per cent stake in Adnoc Gas Pipeline Assets, a newly formed subsidiary with rights to 38 pipelines covering almost 1,000km that connect to UAE customers.

Under the agreement, Adnoc will lease its ownership interest to Adnoc Gas Pipelines for 20 years in return for a volume-based tariff.

Adnoc, which retains full ownership and operating control, will receive an upfront payment of more than $10bn. The new subsidiary will distribute its free cash to the consortium in quarterly dividends.

Adnoc, which said the joint venture would unlock capital that can be deployed in growth initiatives, is accelerating plans to raise its 4m barrels a day oil output capacity to 5m b/d, and is targeting gas self-sufficiency.

As well as raising its “upstream” exploration and production capacity, the company is investing $45bn in petrochemicals and refinery expansion to reorient the economy and create thousands of jobs.

The gas pipelines stake sale is Adnoc’s largest deal since its 2017 decision to open itself up to institutional investment. Since then, it has tapped debt capital markets, floated a stake in its retail arm, launched plans to trade its flagship crude on an exchange in Abu Dhabi and signed partnerships in drilling, refining, fertiliser and trading businesses.

KKR and BlackRock last year agreed to invest $4bn in Adnoc oil pipelines.

Adnoc’s privatisation drive is part of a push to diversify the oil-dependent emirate’s finances and maximise returns from its main source of wealth. The deal offers overseas investors access to low-risk assets with steady income generation.

“This transaction aligns with our strategy of investing in high-quality, essential assets generating stable and predictable cash flows in a sector we know well,” said Bruce Flatt, chief executive of Brookfield Asset Management.

Bankers say the consortium’s financing package of roughly $8bn has been completed.

Bank of America Securities, First Abu Dhabi Bank and Mizuho Securities acted as financial advisers to Adnoc, with Moelis its independent financial adviser.

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