ADNOC inks UAE's largest energy infra deal valued at $20.7bn
The deal will see a six-member global consortium collectively acquire a 49% stake in ADNOC Gas Pipelines
Abu Dhabi National Oil Company (ADNOC) has inked a $20.7bn deal with international infrastructure investors and operators, sovereign wealth and pension funds.
The consortium of investors comprises six members including Global Infrastructure Partners (GIP); Brookfield Asset Management; Singapore’s sovereign wealth fund GIC; Ontario Teachers’ Pension Plan Board (Ontario Teachers’); and NH Investment & Securities and Snam will invest in select ADNOC gas pipeline assets.
The deal is recorded as one of the largest global energy infrastructure transactions, and will see the aforementioned consortium collectively acquire a 49% stake in ADNOC Gas Pipelines. ADNOC Gas Pipelines is a newly formed subsidiary of ADNOC with lease rights to 38 pipelines covering a total of 982.3kms, with ADNOC holding the 51% majority stake.
The deal will enable ADNOC to tap into new pools of global institutional investment capital, while simultaneously assume full operating control over the assets included as part of the investment.
Meanwhile, the transaction will enable ADNOC’s partners to invest in quality energy infrastructure assets with a low-risk profile that generate stable cash flows. Ownership of the pipelines, management of pipeline operations, and all responsibility for associated operational and capital expenditures will remain with ADNOC.
Speaking about the deal, UAE Minister of State and ADNOC Group CEO, HE Dr Sultan Al Jaber, said: "We are pleased to partner with some of the world’s leading global infrastructure and institutional investors in what marks the region’s largest energy infrastructure investment. This milestone transaction demonstrates the trust placed in ADNOC by the global investment community and unlocks significant value from our pipeline portfolio, following last year’s groundbreaking oil pipeline infrastructure investment partnership.
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. 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."
Under the terms of the agreement, ADNOC will lease its ownership interest in the assets to ADNOC Gas Pipelines for 20 years in return for a volume-based tariff subject to a floor and a cap. The transaction will result in upfront proceeds of over $10 billion to ADNOC and is subject to customary closing conditions and regulatory approvals.
The strategic joint venture will see ADNOC pay ADNOC Gas Pipelines a volume-based tariff for the use of pipelines that transport sales gas and natural gas liquids (NGL) from ADNOC’s upstream assets to Abu Dhabi’s key outlets and terminals.
The new subsidiary will distribute 100% of free cash to the investors in the form of quarterly dividends.
Bank of America Securities, First Abu Dhabi Bank and Mizuho Securities acted as financial advisors to ADNOC while Moelis & Company acted as an independent financial advisor to ADNOC.