Singapore-based Keppel Infrastructure Trust (KIT) said on Tuesday its fund management unit would invest $250 million in Saudi Arabia’s Aramco Gas Pipelines Company.
The Keppel unit would join BlackRock Real Assets and the Saudi state-owned Hassana Investment Company in taking an indirect minority and non-controlling stake in a special purpose vehicle (SPV).
The SPV would acquire a 49% stake in the pipeline company, which would lease usage rights in Aramco’s gas pipeline network in Saudi Arabia for 20 years.
“The acquisition is expected to provide long-term, predictable cash flows to Keppel Infrastructure Trust through investing into a strong and growing business that is underpinned by one of the world’s largest reserves of natural gas,” Jopy Chiang, CEO of KIT, said in a statement.
“Driven by domestic consumption, gas demand in Saudi Arabia is expected to increase at a compound annual growth rate of 3.7% from 2021 to 2030,” primarily due to an increase in demand from the power generation and the refining and industrial sectors.”
He said the “strategic addition” of this gas pipeline business will allow KIT to diversify its income base geographically, as well as provide greater stability in the long term by replenishing the portfolio through the addition of another resilient business.
Aramco, the counterparty for the lease and leaseback transaction, is one of the largest listed companies globally, with a market capitalisation of $2 trillion.
“As the world pivots towards a more sustainable energy future, gas is expected to continue to play a key role in the global energy transition,” Chiang said.
KIT’s total assets under management will rise to S$4.6 billion after the transaction.
- George Russell