ADNOC INVESTMENT $20.7 BLN

MEOG - Jun 23, 2020 - The Abu Dhabi National Oil Company (ADNOC) has entered into an agreement with a consortium of investors which will invest in select ADNOC gas pipeline assets valued at $20.7 billion.

The consortium comprises Global Infrastructure Partners (GIP), Brookfield Asset Management, Singapore's sovereign wealth fund GIC, Ontario Teachers' Pension Plan Board (Ontario Teachers'), NH Investment & Securities and Snam (the Consortium).

The consortium will collectively acquire a 49% stake in ADNOC Gas Pipeline Assets LLC (ADNOC Gas Pipelines), a newly formed subsidiary of ADNOC with lease rights to 38 pipelines covering a total of 982.3 kilometers, with ADNOC holding the 51% majority stake. The transaction structure allows ADNOC to tap new pools of global institutional investment capital, while maintaining full operating control over the assets.

Under the terms of the agreement, ADNOC will lease its ownership interest in the assets to ADNOC Gas Pipelines for 20 years in return for a volume-based tariff subject to a floor and a cap.The company says that the transaction will result in upfront proceeds of over $10 billion to ADNOC and is subject to customary closing conditions and regulatory approvals.

The gas pipeline network connects ADNOC's upstream assets to local UAE off-takers. Ownership of the pipelines, management of pipeline operations, and all responsibility for associated operational and capital expenditures will remain with ADNOC.

Commenting on the transaction, His Excellency Dr. Sultan Al Jaber, UAE Minister of State and ADNOC Group CEO, said: "We are pleased to once again partner with some of the world's leading global infrastructure and institutional investors in what marks the region's largest energy infrastructure investment. This milestone transaction demonstrates the trust and confidence placed in ADNOC by the global investment community and unlocks significant value from our pipeline portfolio, following last year's groundbreaking oil pipeline infrastructure investment partnership. Today's landmark investment signals continued strong interest in ADNOC's low-risk, income-generating assets, and sets another benchmark for large-scale energy infrastructure investments in the UAE and the wider region. It solidifies ADNOC's position as an attractive partner and reinforces the UAE's track record as the region's go-to foreign direct investment destination, even during the current unprecedented circumstances."

Adebayo Ogunlesi, Chairman and Managing Partner of GIP commented: "We are delighted to be entering into this strategic partnership with ADNOC, one of the world's leading energy companies. ADNOC's gas network is a core piece of midstream infrastructure in the UAE and this transaction presents a unique opportunity to invest in an asset of this quality and importance, while also supporting ADNOC in their smart growth strategy. This transaction underscores GIP's strategy of investing in high quality infrastructure assets and developing long term strategic partnerships with industry leaders."

"We are pleased to invest in this strategic pipeline system, which serves as the critical link between UAE low-cost natural gas supply and robust in-country demand," said Bruce Flatt, CEO, Brookfield Asset Management. "This transaction aligns with our strategy of investing in high quality, essential assets generating stable and predictable cash flows in a sector we know well. ADNOC has established itself as one of the world's leading natural gas producers, with an exemplary operational record. We look forward to partnering with them in support of this critical asset and sector."

"This strategic transaction is attractive to Ontario Teachers' as it provides us with a stake in a high-quality infrastructure asset with stable long-term cash flows, which will help us deliver on our pension promise," said Ziad Hindo, Chief Investment Officer, Ontario Teachers'. "This new partnership with ADNOC and a group of world-class institutional and infrastructure investors expands our global presence and provides further geographic diversification to our portfolio."

"Investing into ADNOC's gas infrastructure and supporting Abu Dhabi's energy initiatives reinforces our investment diversification strategy and demonstrates Korea's growing presence in the global infrastructure space. I am confident this milestone transaction can become a stepping-stone to broaden Korean investments in the region," remarked Young-Chae Jeong, Chairman & CEO of NH Investment & Securities.

Snam CEO, Marco Alverà, said: "With this strategic transaction, we strengthen our international footprint by entering a country and a region that are key to our sector. Our aim is to promote further cooperation opportunities, particularly in the energy transition. We will work with ADNOC and the Consortium partners by leveraging our industrial skills, know-how and innovative solutions in natural gas infrastructure management and provide our contribution to the UAE's energy system. This transaction was carried out remotely over the past months, testifying the resilience of our company and its willingness to continue its growth path."

This agreement is the largest transaction since ADNOC announced the expansion of its partnership and investment model in 2017. Since then, ADNOC has entered the debt capital markets for the first time, issuing a $3 billion bond backed by the Abu Dhabi Crude Oil Pipeline; partially floated ADNOC Distribution, the first-ever IPO of an ADNOC Group company; and entered into several strategic partnerships in its drilling, refining, fertilizer and trading businesses, amongst others.

-----