EIG, an institutional investor to the global energy sector and infrastructure investor, has announced that it has entered into a lease and lease-back agreement with Saudi Arabian Oil Co. (“Aramco”), under which a consortium of investors led by EIG will acquire a 49% equity stake in Aramco Oil Pipelines Company, a newly formed entity with rights to 25-years of tariff payments for oil transported through Aramco’s stabilized crude oil pipeline network.
The transaction is valued at approximately $12.4 billion with Aramco holding the remaining 51% stake in the new entity, indicating a total equity value of Aramco Oil Pipelines of approximately $25.3 billion.
“This is an extraordinary opportunity for EIG’s investors, and we are proud to partner with Aramco in this marquee global infrastructure asset,” said R. Blair Thomas, EIG’s Chairman and CEO. “This transaction aligns perfectly with EIG’s philosophy of investing in high-quality assets with contracted cash flows in critical infrastructure. We look forward to a long-term partnership with Aramco and to delivering value for our investors through this landmark investment.”
Aramco President & CEO, Amin H. Nasser, said: “This landmark transaction defines the way forward for our portfolio optimization program. We are capitalizing on new opportunities that also align strategically with the Kingdom’s recently-launched Shareek program. Aramco’s strong capital structure will be further enhanced with this deal, which in turn will help maximize returns for our shareholders. Additionally, our long-term partners in this venture will benefit from investment in one of the world’s most impressive energy infrastructures. Moving forward, we will continue to explore opportunities that underpin our strategy of long-term value creation.”
The transaction is expected to close as soon as practicable, subject to customary closing conditions, including any required merger control and related regulatory approvals.
HSBC Bank plc acted as financial advisor to EIG in connection with the transaction, and Latham & Watkins served as EIG’s legal advisor.
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