Sempra announced it has entered into a definitive agreement to sell a non-controlling 10% interest in Sempra Infrastructure Partners (Sempra Infrastructure) to a subsidiary of the Abu Dhabi Investment Authority (ADIA) for $1.785 billion in cash, subject to customary closing adjustments.
This transaction implies an enterprise value for Sempra Infrastructure of $26.5 billion, including asset-related debt of approximately $8.6 billion.
In October, Sempra completed the sale of a 20% non-controlling interest in Sempra Infrastructure to a wholly-owned affiliate of KKR. Upon closing of the transaction announced today, Sempra will own a 70% controlling stake in Sempra Infrastructure.
“We are excited to add ADIA to the partnership at Sempra Infrastructure. As an investor with a global footprint, we expect ADIA will help our team build out a growth platform with an increasingly global capability,” said Jeffrey W. Martin, chairman, and CEO of Sempra. “The timing of the transaction is attractive because it allows us to efficiently rotate capital into a growing set of investment opportunities at our utilities and return capital to our owners in the form of share repurchases. This transaction allows us to do both, while also supporting our balance sheet.”
Sempra Infrastructure was created earlier this year through the consolidation of two world-class infrastructure companies – Sempra LNG and Infraestructura Energética Nova, S.A.B de C.V. (IEnova). The combined business consists of three growth platforms – clean power, energy networks, and LNG and net-zero solutions – with a view towards capturing new opportunities that support the global energy transition.
“At ADIA, we see tremendous opportunity in the ongoing transformation of global energy markets. In North America, few businesses are as well-positioned as Sempra Infrastructure to build the new energy systems for the 21st century. We look forward to building on the partnership with Sempra and KKR to advance the business prospects of Sempra Infrastructure,” said Khadem AlRemeithi, executive director of the Real Estate & Infrastructure Department at ADIA.
The transaction is expected to be completed in the summer of 2022, subject to customary closing conditions and consents from regulators. Under the terms of the agreement, ADIA will have certain customary minority rights with respect to Sempra Infrastructure, commensurate with the size of the investment.
Proceeds from the sale will be used to help fund incremental capital expenditures at Sempra’s utilities and repurchase $500 million of the company’s stock, of which $300 million was completed in the fourth quarter of this year, while also supporting the company’s balance sheet. The transaction is expected to be accretive to earnings as the proceeds are deployed.
White & Case LLP and Sullivan & Cromwell LLP are serving as legal advisors to Sempra on this transaction. Milbank LLP and Gonzalez Calvillo S.C. are serving as legal advisors to ADIA.