Snam to Sell Stake in ADNOC Gas Pipelines to Abu Dhabi’s Lunate Investment Fund
(Reuters) — Italy's gas grid operator Snam will sell its minority stake indirectly held in ADNOC Gas Pipelines to Abu Dhabi-based investment fund Lunate, Snam said on Tuesday.
The deal is in line with the Italian group's long-term strategy to strengthen its role in Europe and reduce exposure to assets not located along Europe's major energy corridors.
"The sale of the stake in ADNOC Gas Pipelines is consistent with the recently presented strategic plan, which focuses on the development of a pan-European multi-molecule infrastructure," Snam's CEO Stefano Venier said in a statement.
Snam classified the stake in ADNOC Gas Pipelines in a cluster of assets, which also includes a minority shareholding in the British Interconnector, that could be divested.
ADNOC Gas Pipelines, a subsidiary of Abu Dhabi National Oil Company (ADNOC), has lease rights to 38 pipelines covering a total of 982 kilometers (610 miles) across the United Arab Emirates.
"We are pleased to strengthen our partnership with ADNOC through this investment and deliver on Lunate's mandate to offer investors access to high-quality assets," Lunate's Managing Partner Murtaza Hussain said.
Rothschild and Bank of America acted as financial advisers for Lunate and Snam, respectively.
Last year Lunate bought a 40% stake from private equity firms BlackRock and KKR in the entity that leases Abu Dhabi National Oil Company's (ADNOC) oil pipelines.
Snam acquired an indirect stake of almost 6% in ADNOC Gas Pipelines in 2020, along with other consortium partners, including international funds GIP, GIC, Brookfield Asset Management, Ontario Teachers' Pension Plan Board and NH Investment & Securities, through Galaxy Pipeline Assets HoldCo Limited.
The Italian group did not provide any figure for the financial value of the transaction.
"Snam currently holds a 5.88% indirect stake in ADNOC, and our model includes a value for Snam's stake of 200 million euros, while the book value is at 135 million euros," Italian investment bank Mediobanca said in a client note.
According to a source, the deal will result in a capital gain for Snam compared with the book value.
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