[Editor's note: This story was updated at 9:55 a.m. CT May 9.]
Enbridge Inc. (NYSE: ENB) will sell a U.S. gas pipelines business and part of its renewable energy assets for a combined $2.5 billion, the Canadian pipeline operator said May 9, as it seeks to shed secondary assets and reduce its massive debt load.
Enbridge said it had sealed a C$1.75 billion (US$1.35 billion) agreement with the Canada Pension Plan Investment Board (CPPIB) to sell a 49% stake in wind and solar power assets in North America and Germany.
The Calgary, Alberta-based firm will also sell Midcoast Operating LP, its U.S. gas pipelines unit, to an affiliate of private equity firm ArcLight Capital Partners LLC for $1.12 billion. Midcoast operates facilities to process and treat natural gas and NGL.
Both deals advance Enbridge's goal of selling assets worth C$3 billion (US$2.33 billion) this year. The company has faced pressure from investors to sell assets that are not integral to its main oil and natural gas pipelines business since its $28 billion purchase last year of U.S.-based Spectra Energy.
Enbridge currently has about $61 billion in long-term debt.
"The sale of Midcoast is an important step in our shift towards a pure regulated pipeline and utility model," Enbridge CEO Al Monaco said in a statement.
For the CPPIB, its deal with Enbridge represents the second bet in as many months on renewable energy, as it takes advantage of low prices in the sector. The pension fund manager said last month it would buy U.S. utility NextEra Energy Partners LP's (NYSE: NEP) wind and solar assets in Ontario for about $582 million.
The CPPIB and Enbridge will also form a joint venture focused on future European offshore wind energy projects.
Both the Midcoast and renewable energy transactions are expected to close in the third quarter.
CIBC Capital Markets was exclusive financial adviser and Dentons was exclusive legal adviser to Enbridge. Gibson, Dunn & Crutcher LLP represented ArcLight in its acquisition of Midcoast from Enbridge.
Enbridge expects to retain its stake in other U.S. renewable power assets, which may be monetized or sold at a later date, it said.
Enbridge's shares rose 2 pct to C$41.22 on the Toronto Stock Exchange, while its U.S.-listed stock was up 2.8% in the morning May 9. (US$1 = C$1.2922)
Recommended Reading
U.S. Shale-catters to IPO Australian Shale Explorer on NYSE
2024-05-04 - Tamboran Resources Corp. is majority owned by Permian wildcatter Bryan Sheffield and chaired by Haynesville and Eagle Ford discovery co-leader Dick Stoneburner.
Scott Sheffield Among Investors in Australian Shale Gas IPO
2024-06-27 - The operator who sold Pioneer Natural Resources Co. to Exxon Mobil in May for $59.5 billion joins his son Bryan Sheffield in shale gas investment Down Under.
LandBridge Chair: In-basin Data Centers Coming for Permian NatGas
2024-06-28 - Newly public Delaware Basin surface-owner LandBridge Co. has a 100-year lease agreement with one developer that could result in ground-breaking in two years and 1 GW in demand.
Analyst Questions Kimmeridge’s Character, Ben Dell Responds
2024-05-02 - The analyst said that “they don’t seem to be particularly good actors.” Ben Dell, Kimmeridge Energy Partners managing partner, told Hart Energy that “our reputation is unparalleled.”
Energy Execs Plan Blank-check IPO to Buy E&P, Midstream Property
2024-06-12 - EQV Ventures Acquisition Corp. reports that $75 billion of aging private-equity investments are looking for liquidity in the next five years, and they want to be in the hunt to buy.