Abu Dhabi sold a $10.1 billion stake in its natural gas pipelines to a group of six investors in the biggest infrastructure acquisition so far this year.
The consortium includes Singapore-based sovereign wealth fund GIC Private Ltd., Ontario Teachers Pension Plan, Toronto, and Global Infrastructure Partners. GIC has $440 billion in assets, according to the Sovereign Wealth Fund Institute. OTPP had C$207.4 billion ($158.7 billion) in assets as of Dec. 31.
Infrastructure has been one of the few bright spots for dealmakers since the coronavirus outbreak led to a sharp downturn in mergers and acquisitions. The volume of such deals increased in the first quarter by almost 20% year-on-year to $81 billion, according to data provider Preqin.
The ADNOC transaction values the pipelines at $20.7 billion. It surpasses KKR & Co.'s agreement in March to buy the waste-management arm of U.K. utility Pennon Group for £4.2 billion ($5.2 billion), and Portuguese oil company Galp Energia SGPS SA's plan to sell its gas-distribution assets for as much as €1.5 billion ($1.7 billion).
The pipelines deal will bring cash into Abu Dhabi, the capital of the United Arab Emirates, as it grapples with this year's nearly 35% plunge in crude prices. It's the largest transaction in the emirate's three-year push to use energy assets to attract foreign direct investment.
"Given the global economic climate, it is a great endorsement of ADNOC and the UAE's world-class assets," ADNOC CEO Sultan Al Jaber said in an interview.
The consortium also includes NH Investment & Securities Co. of South Korea, Italian gas-network operator Snam and Brookfield Asset Management.
The 38 pipelines involved in the deal span about 620 miles. ADNOC will lease the network for 20 years and pay a tariff based on the amount of gas it transports through it. The subsidiary, ADNOC Gas Pipeline Assets, will distribute all its free cash to the investors through quarterly dividends.
Abu Dhabi has been opening up its energy industry as it tries to generate additional sources of funding. ADNOC has sold shares in its distribution unit and brought international investors into its refining and oil-field servicing arms. KKR and BlackRock agreed last year to invest $4 billion in ADNOC's oil pipelines. GIC later bought a stake in the business.
Those earlier steps to raise cash, along with efforts at cutting costs, make ADNOC "far stronger and better positioned to manage the current market dynamics and price fluctuations," Mr. Jaber said.
Under the terms of the deal, investors will hold 49% of the newly formed ADNOC Gas Pipeline Assets LLC. Government-owned ADNOC will own the rest.
Abu Dhabi isn't the only Persian Gulf oil producer selling energy assets. Saudi Arabia listed shares in Saudi Aramco for the first time in December. The company, the world's largest oil exporter, has also asked advisers to study a sale of part of its pipeline unit.
ADNOC was advised by Bank of America, First Abu Dhabi Bank, Mizuho Financial Group and Moelis & Co.
The buyers got a loan of about $8 billion from a pool of international banks to fund the transaction, Snam said in a separate statement. It didn't identify the lenders.
Among the investors, GIP will hold the largest share in the subsidiary. The rest of the group will take equal stakes, Snam said. The Italian company is contributing $250 million of its own funds, it said.