Samsung Asset in $12.4 bn oil pipeline stake purchase
Jun 21, 2021 (Gmt+09:00)
South Korea's Samsung Asset Management Co. has participated in a $12.4 billion acquisition of a 49% stake in Aramco Oil Pipelines Co., a unit of Saudi Aramco, as an equity investor, according to a local newspaper.
Last week, Aramco announced the closing of the share sale in the pipeline company to a consortium including Washington D.C.-based EIG Partners and Abu Dhabi-based Mubadala Investment Co.
After the stake deal, Aramco continues to hold the remaining 51% stake in the pipeline unit, alongside full ownership and operational control of the latter's crude oil pipeline network.
The Saudi oil company said the consortium consisted of a broad cross section of investors from North America, Asia and the Middle East, but did not identify them except for EIG and Mubadala, a sovereign investor of the United Arab Emirates.
According to an Invest Chosun report on June 18, the consortium will make a combined equity investment worth $2 billion and raise an additional $10.4 billion in senior loans to finance the transaction.
As a consortium member, Samsung Asset is securing a 5% stake in Aramco Oil Pipelines for $100 million. Investors in the Samsung vehicle set up for the stake purchase are expected to earn around 9% of their investment per annum, the online news outlet added.
EIG Partners is an energy-focused private equity firm and runs six offices around the world, including one in Seoul. Mubadala manages $243 billion in assets.
As part of the stake deal, Aramco Oil Pipelines will lease its crude oil pipelines to parent company Aramco and receive a tariff under a 25-year agreement. The tariff will be backed by Aramco's minimum volume commitments.
The transaction does not impose any restrictions on Aramco’s actual crude oil production volume, the oil giant said.