The deal values 100% of Sempra’s newly created business platform at around $25.2bn
Sempra Energy has agreed to sell a 20% stake in its new business platform – Sempra Infrastructure Partners to investment firm KKR for $3.37bn in an all-cash deal.
The deal values Sempra Infrastructure Partners at around $25.2bn, which is inclusive of an expected amount of $8.37bn in asset-related debt at the closing.
In December 2020, the US-based energy infrastructure company announced plans to create the new business platform.
According to the company, the new business unit is expected to simplify its non-utility infrastructure investments in North America under a single self-funding platform.
It will bring together Sempra LNG, a developer of liquefied natural gas (LNG) export infrastructure, and Infraestructura Energética Nova (IEnova), which develops renewables and natural gas infrastructure in Mexico.
Sempra Infrastructure Partners’ LNG portfolio will have an LNG export capacity of up to 45 million tonnes per annum (Mtpa), either in development, construction, or operation.
The LNG assets of the business are located on the North American Pacific and Gulf Coasts.
Its renewable portfolio has up to 4GW of capacity either in development, construction, or operation in Mexico along with associated electric transmission infrastructure.
The natural gas infrastructure portfolio of Sempra Infrastructure Partners is packed with distribution firms and some cross-border and in-country pipelines. These include pipelines that export natural gas from the US to Mexico and those that supply the Energía Costa Azul LNG facility.
Sempra Energy will use the proceeds from the transaction for funding growth across its $32bn capital programme, focussed on its US utilities, and to further consolidate its balance sheet.
Sempra Energy chairman and CEO Jeffrey Martin said: “Over the next decade, we expect the energy markets in North America to continue to grow and become increasingly integrated.
“Combining our resources with KKR improves our ability to capture new investment opportunities in cleaner forms of energy and the critical infrastructure that stores and transports it.
“This transaction also sends a clear signal about the value and expected growth of our infrastructure portfolio.”
KKR will be buying the minority stake in Sempra Infrastructure Partners via its Global Infrastructure Investors Funds.
As per the terms of the deal, KKR will acquire Sempra Energy’s indirect interest in IEnova at $4.13 per share.
KKR partner and global head of infrastructure Raj Agrawal said: “Investing in critical new energy infrastructure creates jobs, delivers reliable energy with fewer emissions and supports North America’s economic recovery.
“That is why we are excited to partner with Sempra Energy. This infrastructure platform provides a strong foundation to expand cleaner energy resources across the continent.
“Backed by strong, contractually-supported, long-term cash flows, our investment is also consistent with KKR Infrastructure’s strategy to seek stable and predictable returns for our investors.”
The deal, which is subject to consents from some third parties and regulators, and other customary closing conditions, is likely to close by mid-2021.