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Investors led by EIG Global Energy Partners LLC agreed to accumulate a roughly $12.4 billion stake during a Saudi Aramco pipeline rights company.
The group will acquire a 49% equity stake in Aramco Oil Pipelines Co., a newly formed entity with rights to 25 years of rate payments for oil shipped through the Saudi oil giant’s network of conduits, EIG said during a statement. The deal implies a complete equity value of about $25 billion for Aramco Oil Pipelines.
The deal is a component of Saudi Arabia’s drive to open up to foreign investment and use the cash to diversify its economy. Asset disposals also go how to helping the energy giant maintain payouts to shareholders, also as investments in oil fields and refinery projects. the corporate paid a $75 billion dividend last year, the very best of any listed company, most of which visited the state.
Aramco has become the world’s third-largest company by market price, trailing only Apple Inc. and Microsoft Corp., after an initial public offering in 2019 during which the oil giant raised $25.6 billion for fewer than 2% of its shares.
“This landmark transaction defines the way forward for our portfolio optimization program,” Aramco Chief military officer Amin Nasser said within the statement. “Aramco’s strong capital structure is going to be further enhanced with this deal, which successively will help maximize returns for our shareholders.”
The deal was described as a lease-and-lease-back agreement. The state-controlled company will lease the usage rights in its pipelines to Aramco Oil Pipelines. The new entity will grant back to Aramco the prerogative to work and maintain the network for 25 years and collect rates from the parent company reciprocally. Aramco will still retain ownership of the pipelines.
“This transaction aligns perfectly with EIG’s philosophy of investing in high-quality assets with contracted cash flows in critical infrastructure,” Robert Blair Thomas, Chief military officer of EIG, said within the statement. The Washington-based firm owns about $22 billion in energy-related assets globally.