KKR to take 25% stake in Eni biofuel unit, valuing it at $13 B
U.S. fund KKR is buying a 25% stake in Italian energy group Eni's biofuel business Enilive, in a deal that values the unit at €11.75 B ($12.7 B) including debt.
KKR's €2.94-B purchase improves Eni's financial position while ensuring it retains control of Enilive, the Italian company said on Thursday.
The deal is part of Eni's so-called 'satellite' strategy to bring in co-investors to growth businesses. The strategy is aimed at raising funds to help Eni decarbonize its products.
"This agreement marks a significant further step in our business strategy related to the energy transition," Eni CEO Claudio Descalzi said.
The deal will be conducted via a €500-MM capital increase for Enilive, which will be reserved for KKR, plus the sale of Enilive shares owned by Eni for €2.438 B. Eni will inject €500 MM into Enilive before the deal closes, ensuring it is debt free.
"This (deal) aligns with our strategy to support transformative energy projects across Europe," said Alberto Signori, a partner in KKR's European Infrastructure team.
KKR has been investing in Italy since 2005 and recently finalized a deal to buy Telecom Italia's fixed-line network.
Satellite strategy. Royal Bank of Canada analyst Biraj Borkhataria said the deal added credibility to Eni's strategy following a similar transaction for another unit.
In March, Swiss asset manager Energy Infrastructure Partners agreed to take a minority stake in Eni's renewables subsidiary Plenitude.
Sources said last month that U.S. funds Stonepeak and Apollo were in talks with Eni over the potential sale of a second stake in Enilive.
Biofuels are expected to play a major role in decarbonizing the truck, aviation and shipping sectors in coming years.
Enilive owns bio-refineries in Italy and abroad that produce biofuels using waste and vegetable oil partly from the group's agri-business in many African countries.
The subsidiary is expected to make core earnings of around €1.2 B in 2025, up from €1 B estimated for this year.
JP Morgan and Mediobanca were financial advisers for Eni. Deutsche Bank and UniCredit were financial advisers for KKR, with Kirkland & Ellis and Gianni & Origoni acting as legal counsel.
($1 = €0.9270)
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