ADIA buys minority stake in Sempra Infrastructure for $1.8bn

The deal will see the Abu Dhabi SWF take a 10% interest in the firm, which owns a portfolio of natural gas and renewables assets.

Sempra Infrastructure Partners – a venture formed at the beginning of this year through the merging of Sempra LNG and Infraestructura Energética Nova – announced on Wednesday that its plans to sell a 10 percent stake to a subsidiary of sovereign wealth fund Abu Dhabi Investment Authority. 

ADIA plans to pay $1.78 billion in cash for the stake, which puts Sempra Infrastructure’s enterprise value somewhere in the ballpark of $26.5 billion, including asset-related debt of approximately $8.6 billion. This is an increase from the valuation resulting from the sale of a 20 percent non-controlling interest to infrastructure funds managed by KKR just two months ago. Then, KKR paid $3.37 billion in cash, valuing Sempra at approximately $25.2 billion, with asset-related debt totalling $8.37 billion.

Sempra’s business model is three pronged: clean power, energy networks and liquified natural gas. This uptick in its valuation comes at the tailwinds of a global reckoning over climate change following the close of COP26 in November, as well as a rebound in natural gas prices after historic lows during the worst of the covid-19 pandemic.

Khadem Al Remeithi, executive director of the real estate and infrastructure department at ADIA, stated: “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”.

As of April 2021, Sempra Infrastructure’s portfolio – largely situated across the American Southwest and northern Mexico – consisted of up to 45 million tonnes per annum of liquified natural gas export capacity, 4GW of renewable energy generation and a natural gas portfolio consisting of distribution companies and some cross-border and in-country pipelines, including those that export US natural gas to Mexico.

In a statement, Sempra said it plans to use sales proceeds to not only support the company’s balance sheet, but to “fund incremental capital expenditures at Sempra’s utilities and repurchase $500 million of the company’s stock”. A reported $300 million in stock buybacks has already been completed in Q4 of this year.

The deal is expected to close in summer 2022, subject to customary closing adjustments.