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KKR plans to grow its infrastructure with participations in LNG projects on the coast of the Gulf of Sempras, Mexico

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Global investment firm KKR acquires stake in business unit of Sempra Energy that manages liquefied natural gas (LNG) projects on the Gulf of Mexico coast and in Mexico as it anticipates growth in northern energy infrastructure -american.

Under the terms of the deal announced on Monday, KKR will pay $ 3.37 billion for a 20% non-controlling stake in subsidiary Sempra Infrastructure Partners.

“Over the next decade, we expect North American energy markets to continue to grow and become increasingly integrated,” Sempra CEO Jeffrey Martin said on Monday. Combining our resources with KKR enhances our ability to seize new investment opportunities in cleaner forms of energy and in the critical infrastructure that stores and transports it. This transaction also sends a clear signal on the value and expected growth of our infrastructure portfolio. “

Meanwhile, Raj Agrawal, head of global infrastructure at KKR, said the business unit provides a solid foundation for expanding natural gas and renewables across North America.

San Diego-based Sempra said the deal valued the infrastructure subsidiary at around $ 25.2 billion, including $ 8.37 billion in debt. Closing is scheduled for the middle of the year.

Sempra Infrastructure Partners was created in December. It combined the LNG unit with its subsidiary Infraestructura Energtica Nova (IEnova) in Mexico. At the time, Sempra said she was looking to sell a minority stake in the company.

The infrastructure unit has a portfolio of 45 million metric tonnes / year of LNG, which includes the 15 mmty Cameron LNG operational facility in Louisiana, which may be expanded. It is also developing the proposed 13.5 mmt Port Arthur LNG terminal in southeast Houston in partnership with a subsidiary of Saudi Arabian Oil Co., aka Saudi Aramco, which could face sanctions this year.

In Mexico, it is developing the Energia Costa Azul (ECA) export project in Baja California, which was the only LNG development in North America to be sanctioned last year. The first phase, with a capacity of 2.5 mmt, is expected to be commissioned in 2024.

The partnership also has gas infrastructure, including pipelines to send US feed gas to the ECA, and a Mexican renewable energy portfolio of around 4 GW.

Sempra said the proceeds from the sale would be used to help fund the growth of its $ 32 billion investment program, which focuses on its U.S. utilities, and to further strengthen its balance sheet. The company said last month it would target nearly 90% of capital investment this year in its three major utilities operating in California and Texas.

KKR would make this investment through its infrastructure fund, which currently holds $ 27 billion in assets. The company’s recent investments include the Coastal GasLink pipeline project to supply LNG Canada in British Columbia with feed gas. Past investments also include the Williams Rocky Mountain Midstream system and the private player of Permian Spur Energy Partners LLC.

When Sempra formed the partnership in December, it also announced its intention to launch a share exchange offer for the remaining shares of IEnova. Sempra planned in December to complete the swap by the end of March. On Monday, however, Sempra said he was still waiting for government permission to begin the process.

Under the offer, Sempra would exchange one common share for one IEnova share at an exchange ratio of 0.0313. Sempra intends to list its exchange shares on the Mexican stock exchange Bolsa Mexicana de Valores SAB de CV. The offer has an implied price of 82 Mexican pesos, or $ 4.08 / IEnova share.

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