Page 7 - MEOG Week 46 2021

MEOG COMMENTARY MEOG

In September, sources were quoted as pipelines deal. Despite the draw of Aramco’s oil Aramco’s oil and gas
saying that Aramco had – through advisors assets, the company sought to improve the deal’s pipeline network.
– approached potential bidders including state- attractiveness by offering potential buyers a syn-
backed Chinese and South Korean funds as well dicated loan which would cover the majority of Source: Aramco
as North American private equity and infra- the lease fee. Following a request for propos-
structure funds. als (RfP) to a pool of banks, Citigroup, HSBC
Speaking to Downstream MEA (DMEA) this Holdings and Mizuho Financial Group were
week, a source close to proceedings said that all reported to have been involved in providing
the EIG, Hassana and Silk Road Fund bids are around $10.5bn of financing for the transaction.
worth watching closely given their involvement In September, though, EIG and its partners
in the oil pipeline consortium. “Aramco favours were reported to be preparing to issue $4-4.5bn
lasting relationships and these companies are a of bonds to refinance the loan that paid for the
step ahead because of the AOPC deal,” he added. deal. Sources said that the bonds would be issued
At the time that agreement was announced, in two or three tranches, echoing comments
EIG CEO Robert Blair said it aligned “perfectly reported at the time of the deal, though expedit-
with EIG’s philosophy of investing in high-qual- ing the 2022-2024 timeline.
ity assets with contracted cash flows in critical The first of these was expected to be issued
infrastructure”. in October, with the consortium targeting at
Meanwhile, DMEA understands from least $4bn. A second tranche is planned to cover
sources close to proceedings that prospective around $5-5.5bn, though no date for this has yet
bidders Apollo Global Management, BlackRock, been indicated.
Brookfield Asset Management and Global Infra- Aramco’s strategy is closely following that
structure Partners (GIP) all declined to make implemented by regional rival Abu Dhabi
final offers because of Aramco’s asking price. National Oil Co. (ADNOC), which has closed
billions of dollars of deals for stakes in its oil and
Financing gas pipelines, real estate and refineries, as well as
Reports have quoted an equity figure of around listing its retail fuel arm and more recently, the
$3.5bn, with the remainder made up of bank ADNOC Drilling subsidiary.
debt amid rumours of a total deal valuation in With the gas pipelines deal nearing comple-
excess of $20bn; however, a figure of around tion, Aramco is understood to be considering
$15bn is thought to be more likely. plans to carry out an initial public offering (IPO)
This structure also mirrors that of the oil on its retail fuels division.™

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