BlackRock, KKR eye new backers for ADNOC oil pipeline investment

Dubai: BlackRock and KKR are exploring bringing in new backers for their investment in Abu Dhabi National Oil Co.’s oil pipeline network, people with knowledge of the matter said.

The asset managers are considering moving their combined 40 per cent holding in ADNOC Oil Pipelines into a new fund structure that would allow additional investors to gain exposure to the asset, according the people. The stake was worth about $4 billion including debt at the time of their initial investment, and is likely to fetch a valuation well above that in any deal, the people said.

Investment firms have increasingly relied on structures like continuation funds as alternatives to a sale or initial public offerings of their portfolio companies. The introduction of new limited partners would allow BlackRock and KKR to continue managing the stake while giving investors in their earlier funds a chance to cash out.

Deliberations are at an early stage, and there’s no certainty they will proceed with a transaction, the people said, asking not to be identified as the information is private. Representatives for BlackRock, KKR, and ADNOC declined to comment.

BlackRock and KKR bought the stake in ADNOC Oil Pipelines in 2019, the first investment by foreign asset managers in the infrastructure of a Middle Eastern government-owned oil producer. ADNOC Oil has leases on 18 pipelines and the Abu Dhabi state oil firm continues to manage the pipelines, according to a statement that year.

ADNOC, which owns the remaining stake in the pipeline entity, reduced its stake to 51 per cent after selling shares to Abu Dhabi Retirement Pensions & Benefits Fund and Singapore sovereign wealth fund GIC in 2019.