U.S.-based private equity investor KKR will buy a 24% stake in Eni’s biofuels unit Enilive for about $3.17 billion (€2.938 billion), the Italian energy company said Oct. 24.

The deal, which values the biofuels company at about $12.7 billion, takes shape as Eni works to strengthen its capital structure and lower its debt while retaining control of a high-potential business in the burgeoning biofuels market.

Demand for biofuels has been growing as companies seek out lower-emissions energy sources to shrink carbon footprints.

Eni CEO Claudio Descalzi said the agreement is a significant step in furthering the company’s energy transition business strategy. The company is also having discussions with other firms concerning Plenitude, its renewable and retail business.

“Enilive, alongside Plenitude, is central to our commitment to providing decarbonized energy solutions and progressively reducing emissions from the end use of our products,” Descalzi said. “Both companies have attracted significant interest from leading international partners and achieved high market valuations, which indicates that our approach to the energy transition is appreciated.”

Described by Eni as a mobility transformation company, Enilive specializes in biorefining, biomethane production, smart mobility solutions and the marketing and distribution of energy carriers such as hydrogen and other products.

As part of the deal with KKR, Eni will pump about €500 million into Enilive before the transaction closes, erasing the unit’s debt. KKR will purchase Enilive’s shares from Eni for a value of €2.438 billion, corresponding to a post-money valuation of €11.75 billion of equity value for 100% of Enilive’s share capital, Eni said in a news release.

The transaction’s closing is subject to customary regulatory approvals.

“This [agreement] aligns with our strategy to support transformative energy projects across Europe,” said Alberto Signori, partner in KKR's European Infrastructure team. “With our global infrastructure platform and local expertise, we’re excited to help Enilive scale its impact in decarbonizing transportation and expand internationally. We look forward to contributing to its continued growth and success.”

KKR said it has been investing in Italy across asset classes since 2005, most recently acquiring Telecom Italia’s fixed-line network and incorporating it into FiberCop to expand Italy’s broadband network and help fast-track the country’s digital transition.

For Eni, the agreement marks a “significant development” of the company’s satellite model. The model seeks to give businesses with high independent growth potential access to new capital and provide visibility into their fair market value, according to Eni.

“We believe that the right path to successfully address the transition entails the creation of low or zero-carbon businesses that respond to a real and existing demand for energy products and that grow independently thanks to the success of their business models and products,” Descalzi said. With KKR’s support, Enilive is poised to capitalize on its ambitious growth plans and continue delivering real, scalable energy transition solutions.”

Deutsche Bank and Unicredit served as KKR’s financial advisers on the deal, while Kirkland & Ellis and Gianni & Origoni served as legal counsel.

Eni is scheduled to discuss its third-quarter 2024 results on Oct. 25.

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