Abu Dhabi Said to Near Pipeline Deal With GIP-Backed Group

(Bloomberg) --

Abu Dhabi's state-owned energy producer is close to selling a multibillion-dollar stake in its natural gas pipelines to an investor group backed by Global Infrastructure Partners and Brookfield Asset Management Inc., in what is set to be one of the year's biggest infrastructure deals.

The buyers could sign an agreement with Abu Dhabi National Oil Co. for a 49% holding in the pipelines this month, according to people with knowledge of the matter, who asked not to be identified as discussions are private. A deal could value the pipelines at more than $15 billion, including debt, they said.

Equity financing has been arranged and the bidders are negotiating the terms of a debt package with banks, the people said. While discussions are advanced and ongoing, the timing and valuation could still change, according to the people.

The GIP consortium also includes Italian infrastructure operator Snam SpA, Ontario Teachers' Pension Plan, Singapore sovereign fund GIC Pte and South Korea's NH Investment & Securities Co.

Representatives for Adnoc, GIP, Brookfield, Ontario Teachers', Snam and NH Investment declined to comment. Representatives for GIC did not immediately respond to requests for comment.

Defying Downturn

Infrastructure investors have been defying the dealmaking downturn brought on by the coronavirus pandemic to deploy capital. The Adnoc deal could surpass KKR & Co.'s agreement in March to buy the waste-management arm of U.K. utility owner Pennon Group Plc for 4.2 billion pounds ($5.2 billion). It could also top plans by Portugal's biggest oil company, Galp Energia SGPS SA, to sell its gas distribution assets for as much as 1.5 billion euros ($1.7 billion).

Abu Dhabi has been opening up the operations of its state-owned oil producer to foreign partners as part of a push to diversify its economy and generate additional sources of funding. Adnoc has already sold shares in its distribution unit and brought in international investors to its refining and oil field services business. KKR and BlackRock Inc. agreed last year to invest $4 billion in Adnoc's oil pipeline network. GIC bought a stake in the business later.

The United Arab Emirates, of which Abu Dhabi is the capital, isn't the only Persian Gulf oil producer using its energy assets to draw fresh capital to the region. In Saudi Arabia, Aramco, the world's largest oil producer, is also weighing the sale of a stake in its pipeline unit to raise money amid the slump in crude prices.

The GIP consortium was seeking a loan of about $8 billion to finance the potential purchase of the stake in the gas pipelines and reached out to banks to gauge their interest in participating, people familiar with the matter said in April.