Monday 16 August 2021 3:45 pm

Saudi Aramco sizes up private equity and sovereign funds for $17bn gas pipeline stake

Saudi Aramco is looking to raise at least $17bn from the sale of a significant minority stake in its gas pipelines, sources told Reuters today.

A sale that large for a slice of the pipeline deal would be higher than the $12.4bn raised from its oil pipeline deal.

Potential bidders including North American private equity and infrastructure funds, as well as state-backed funds in China and South Korea have been approached by Aramco through its advisers before a formal sale process kicks off in the next few weeks, they said.

The deal size may include $3.5bn of equity and the remainder will be funded by bank debt, one source said, while another source said the transaction size could top $20bn.

Saudi Arabia is the world’s sixth largest gas market, according to Aramco, whose Master Gas System (MGS) derives value from a range of gas deposits and helps deliver it to consumers.

“The gas deal is about the long-term view of gas utilisation and consumption in Saudi Arabia,” said one source familiar with deal, explaining why the gas deal may generate higher proceeds.

The source said many industries will shift to gas under the economic Vision 2030, meaning domestic gas demand will rise.

Aramco is working with JP Morgan and Goldman Sachs on the deal to tap potential buyers, sources have said.

The companies tapped include the ones who took part in the stake sale process for Abu Dhabi National Oil Co’s gas pipelines, which was bought by a consortium of investors including Global Infrastructure Partners (GIP), Brookfield, Singapore sovereign wealth fund GIC and European gas infrastructure owner and operator SNAM .

Aramco, JPMorgan and Goldman declined to comment.

Brookfield and SNAM declined to comment. GIP did not immediately respond to a request for comment.

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