OMERS and Spain's Enagas Sell Their Stake in Chile's GNL Quintero
Spain's Enagas and Canadian pension fund Omers agreed to sell their holdings in Chile's GNL Quintero, which represent an 80% stake, to Belgian gas utility Fluxys and investment fund EIG, Enagas said on Monday.
The Spanish gas pipeline operator which owns 45.4% in GNL Quintero, said it sold its stake for $661 million and said the sale was part of a wider strategic plan to "rotate" assets.
GNL Quintero operates a gas port terminal and a regasification plant in Valparaiso in Chile.
Enagas did not give a sale price that Omers secured for its stake in GNL Quintero.
Gas shipping infrastructure assets have attracted investors after several European countries said they intended to diversify from gas pumped out of Russia through pipelines in reaction to the Russian invasion of Ukraine last month.
OMERS Infrastructure put out a statement on this deal:
OMERS Infrastructure today announced that it has signed an agreement, together with OMERS partner Enagás Internacional, to sell their combined 80% interest in GNL Quintero S.A. (GNLQ), to a consortium formed by EIG and Fluxys S.A. OMERS Infrastructure will be selling 100% of OMERS Infrastructure Chile Holdings I SpA, which owns a 34.6% stake in GNLQ.
Operating under high safety and performance standards, GNLQ is a leading terminal located in the Valparaiso Region, that is responsible for the reception, unloading, storage and regasification of liquified natural gas (LNG). GNLQ facilitates the provision of a reliable and consistent source of energy to households, commercial and industrial customers, power plants and other users located in central Chile, including Santiago.
“We have been an active investor in GNLQ since 2017, and have been privileged to have worked alongside our shareholding partners and GNLQ’s experienced management team. During our ownership period, GNLQ has delivered reliable operational performance, ensuring energy security to its direct and end user customers,” said Gisele Everett, Senior Managing Director, Americas, OMERS Infrastructure.
“We are proud of having worked to position GNLQ for the future, including by supporting the company’s plans to initiate a project to produce green hydrogen for central Chile. We wish the company, and its new investors EIG and Fluxys, continued success as GNLQ enters this new chapter in its history,” she continued.
OMERS Infrastructure will redeploy the proceeds to continue to grow its portfolio in its focus markets and across its five priority investment themes – energy transition, mobility, connectivity, community and natural systems.
The transaction is subject to regulatory approvals and expected to close in H2-2022. Further financial information will not be disclosed. OMERS Infrastructure was advised by Credit Suisse as financial adviser and Milbank LLP and Carey y Cía. Ltda. as legal advisers.
Enagás International put out this statement on this deal:
Enagás International, through its subsidiary Enagás Chile, and OMERS Infrastructure, have reached an agreement to jointly sell their respective shareholdings in Chile’s GNL Quintero S.A., which together represent an 80% ownership, to the consortium formed by EIG and Fluxys.
This deal is part of the asset rotation process announced by Enagás in its Strategic Plan.
Enagás has agreed to sell its 45.4% shareholding in GNL Quintero S.A. for USD 661 million, approximately 601 million euros at the current exchange rate.
This operation is subject to approval by the anti-trust authorities and other conditions specific to this type of deal.
The transaction is expected to be completed in the second half of 2022.
GNL Quintero is a Chilean company that owns a Liquefied Natural Gas (LNG) reception, unloading, storage and regasification terminal in the Valparaíso Region of Chile, that plays a critical role in securing a reliable supply of natural gas for the country´s central region, where most of the population lives.
Since its initial investment in 2012, Enagás has contributed its extensive experience as an industrial partner sharing the highest operational, maintenance and sustainability standards with GNL Quintero, and promoting, together with management and its partners, the development of the terminal to position GNL Quintero as a strategic asset for the country´s energy transition.
Chile is well positioned to be a global leader in the production and export of green hydrogen and Enagás will continue to contribute to the decarbonisation process with renewable gas projects in this country. Along these lines, the company is promoting the “Green Hydrogen Bahía Quintero” project, together with Acciona and GNL Quintero that has been selected to receive a USD5.7 million financing from the Chilean Economic Development Agency (CORFO), equivalent to approximately 5.1 million euros at the current exchange rate.
This project, which would have a nominal capacity of 10 MW, seeks to offer an alternative source of energy that is clean and sustainable, while contributing to the country’s decarbonisation and the environmental development of the communes of Puchuncaví and Quintero, in the Valparaíso Region.
And EIG and Fluxys put out their own statement on this deal:
EIG, a leading institutional investor to the global energy and infrastructure sectors, and Fluxys, a leading energy infrastructure company, today announced that they jointly will acquire an 80% equity stake in GNL Quintero S.A. (“Quintero”), the largest liquefied natural gas (LNG) regasification terminal in Chile, from Enagas Chile SpA and affiliates of OMERS Infrastructure. Terms of the transaction were not disclosed.
Quintero is a key energy infrastructure business supporting Chile’s decarbonization strategy with a bridging fuel that allows for the reconciliation of economic growth with the uptake of renewables and the phasing out of coal. Operational since 2009, Quintero is the largest terminal for receiving and unloading LNG in Chile, as well as for its storage and regasification capacities. The terminal benefits from its strategic location in Quintero Bay, supplying a diversified base of customers in central Chile across residential, commercial, industrial, transportation and power generation sectors. The terminal owns 75% of the country´s LNG regasification capacity and in 2021, 67% of the total natural gas imports (both LNG and pipeline imports) arrived in Chile through this strategic asset. With a daily regasification capacity of 15 million m3, an LNG storage capacity of 334,000 m3 and 2,500 m3 per day of truck loading capacity, the terminal is a reliable supplier of natural gas that contributes to Chile’s energy diversification and security.
Chile has world-class solar and wind resources and a RES capacity equivalent to 4% of total global energy demand. The country is aiming to become one of the world’s three largest green hydrogen producers with plans to install 200 GW of renewable power by 2040 to produce green hydrogen. Chile already has signed several agreements to promote the export of green hydrogen, among others with the Belgian ports of Antwerp/Zeebrugge, Germany, the Port of Rotterdam and South Korea.
The acquisition builds on EIG’s presence in the Chilean market, where the firm owns Cerro Dominador, a groundbreaking solar complex that combines a 100MW photovoltaic (PV) plant with a 110MW concentrated solar power (CSP) plant. The PV plant has been operational since 2017 and the CSP plant was successfully synchronized with Chile’s electricity grid in April 2021. EIG also is a partner in AME S.p.A, a Chile-based project developer and independent power producer. AME co-owns Generadora Metropolitana, the fifth largest electricity generation company in Chile, as well as HIF Global, a leader in the hydrogen and e-fuels sector, with a series of commercial-scale projects in development and expected to reach construction over the next several years.
For Fluxys, the partnership is a forward-looking investment creating a foothold in another country in Latin America where the energy transition stands high on the government agenda. With its abundant solar and wind resources, Chile aims to produce the world’s cheapest green hydrogen. The Belgian Hydrogen Import Coalition with Fluxys as partner has affirmed the competitiveness and feasibility of a green molecule supply chain from Chile to Europe and Belgium.
“We are thrilled by the opportunity to invest in Quintero, a company that aligns perfectly with our focus on strategic, high-quality infrastructure that is critical to the region it serves and yields attractive, contracted cash flows,” said R. Blair Thomas, EIG’s Chairman and CEO. “We are pleased to be partnering again with Fluxys, a world-class operational partner, to help Quintero support Chile’s energy needs and transition goals with reliable energy. Quintero’s strong presence in natural gas infrastructure serves as an attractive launching point to expand its presence in related and adjacent sectors, including storage, truck loading and regasification, as well as to develop production capacity for green hydrogen, where Quintero has significant potential to be a domestic leader in the nascent industry.”
“With 3 LNG terminals in Europe, our ambition to invest outside Europe and to become the transporter of new energy carriers, Quintero is a perfect fit with our strategy for growth in view of the low carbon future”, said Pascal De Buck, Fluxys’ Managing Director and CEO. “We want to deploy and expand our industrial expertise worldwide and are excited to partner with EIG as leading global energy infrastructure investor already intensively involved in energy transition projects in Chile. Our partnership in Quintero brings Fluxys closer to hydrogen developments in Chile and supports the import of hydrogen in Belgium. We are looking forward to collaborating and developing new opportunities with Quintero’s management and workforce.”
The transaction is expected to close in the second half of 2022, subject to customary closing conditions, including any required merger control and related regulatory approvals.
Citigroup Global Markets Inc. acted as financial advisor to EIG and Fluxys in connection with the transaction. White & Case LLP served as EIG’s legal advisor and Linklaters LLP served as Fluxys’ legal advisor.
About EIG
EIG is a leading institutional investor to the global energy and infrastructure sectors with $23.0 billion under management as of December 31, 2021. EIG specializes in private investments in energy and energy-related infrastructure on a global basis. During its 40-year history, EIG has committed $39.7 billion to the energy sector through 379 projects or companies in 38 countries on six continents. EIG’s clients include many of the leading pension plans, insurance companies, endowments, foundations and sovereign wealth funds in the U.S., Asia and Europe. EIG is headquartered in Washington, D.C. with offices in Houston, London, Sydney, Rio de Janeiro, Hong Kong and Seoul. For additional information, please visit www.eigpartners.com.
About Fluxys
Headquartered in Belgium, Fluxys is a fully independent energy infrastructure group with 1,300 employees active in gas transmission & storage and liquefied natural gas terminalling. Through its associated companies across the world, Fluxys operates 12,000 kilometers of pipeline and liquefied natural gas terminals totaling a yearly regasification capacity of 29 billion cubic meters. Among Fluxys’ subsidiaries is Euronext listed Fluxys Belgium, owner and operator of the infrastructure for gas transmission & storage and liquefied natural gas terminalling in Belgium.
As a purpose-led company, Fluxys, together with its stakeholders, contributes to a better society by shaping a bright energy future. Building on the unique assets of gas infrastructure and its commercial and technical expertise, Fluxys is committed to transport hydrogen, biomethane or any other carbon-neutral energy carrier as well as CO2, accommodating the capture, usage and storage of the latter. www.fluxys.com.
Alright, so what is this deal all about?
In short, Spain's Enagas and OMERS agreed to sell their holdings in Chile's GNL Quintero, which represent an 80% stake, to Belgian gas utility Fluxys and investment fund EIG.
For Enagas, this sale is part of its Strategic Plan and part of an asset rotation process.
For its part, OMERS Infrastructure will redeploy the proceeds to continue to grow its portfolio in its focus markets and across its five priority investment themes – energy transition, mobility, connectivity, community and natural systems.
Fluxys and EIG are buying a top Chilean asset, capitalizing on the growing demand for shipping infrastructure assets that have attracted investors after several European countries said they intended to diversify from gas pumped out of Russia through pipelines in reaction to the Russian invasion of Ukraine last month.
Also, it's part of a wider program to decarbonize their operations.
Pascal De Buck, Fluxys’ Managing Director and CEO, states this:
“With 3 LNG terminals in Europe, our ambition to invest outside Europe and to become the transporter of new energy carriers, Quintero is a perfect fit with our strategy for growth in view of the low carbon future. We want to deploy and expand our industrial expertise worldwide and are excited to partner with EIG as leading global energy infrastructure investor already intensively involved in energy transition projects in Chile. Our partnership in Quintero brings Fluxys closer to hydrogen developments in Chile and supports the import of hydrogen in Belgium. We are looking forward to collaborating and developing new opportunities with Quintero’s management and workforce.”
Enagas sold its 45% stake for $661 million, leaving us to deduce that OMERS Infrastructure sold its 35% stake for $512 million (these figures aren't official).
Again, OMERS Infrastructure will redeploy this money across its five priority investment themes – energy transition, mobility, connectivity, community and natural systems.
OMERS Infrastructure is now managing over $32 billion in assets across 12 countries and has been doing direct investing for over 20 years.
It holds many investments including GNL Quintero, one of the largest liquefied natural gas regasification terminal in Chile, serving the country’s largest population centers which it bought a stake in back in 2017.
Back then, that deal marked the Canadian pension fund's first investment foray into Latin America.
In 2019, GNL Quintero announced its US$1.1 billion debut on the international capital markets.
Interestingly, that deal was said to be the third largest by a private Chilean issuer at the time and it was oversubscribed with orders reaching close to US$5 billion.
That just shows you what a high-quality asset this is.
Now it's time for OMERS Infrastructure to move on, let the new owners help that company grow and focus on deploying capital in areas which align better with its strategic growth focus areas.
Below, a webinar from the Institute of the Americas on the global LNG and South American market (September 2020).
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