KKR, BlackRock Said to Plan $3 Billion Loan for Adnoc Pipelines

(Bloomberg) -- KKR & Co. and BlackRock Inc. are seeking to raise a $3 billion loan to fund their purchase of a stake in Abu Dhabi National Oil Co.’s pipelines business, according to people with knowledge of the plan.

The private equity firms’ special purpose vehicle has reached out to foreign banks for a 23-year facility, which would be one of the largest infrastructure financing deals in the Gulf this year, said the people, asking not to be identified because the information is private. Sumitomo Mitsui Banking Corp. and BNP Paribas SA are among lenders helping arrange the loan, which is expected to get more expensive over time, they said.

KKR and BlackRock agreed in February to invest $4 billion in Abu Dhabi’s oil pipelines, securing two decades of guaranteed returns and providing the Middle Eastern energy producer with cash to help diversify its economy. The companies will become partners in the newly formed Adnoc Oil Pipelines, which will lease the assets for 23 years, Adnoc said in a statement at the time.

The loan will follow a handful raised so far this year by United Arab Emirates-based companies. Emirates Global Aluminium PJSC secured a $6.5 billion loan in January to repay debt, Adnoc’s refining unit completed a $2.5 billion five-year term loan and revolving credit facility that same month, while solar company Noor Energy 1 PSC borrowed $2.5 billion, according to data compiled by Bloomberg.

Adnoc will own 60 percent of the joint venture, while the private equity firms’ special purpose vehicle will hold the rest. The deal, which is expected to close in the third quarter, gives the partnership leases on 18 pipelines. Adnoc, which produces about 3 million barrels of crude a day, will continue to manage operations.

Representatives for Adnoc, KKR and BlackRock declined to comment. A spokeswoman for BNP Paribas didn’t immediately respond to a request for comment, while a spokesman for SMBC couldn’t immediately comment.

--With assistance from Anthony DiPaola and Yuki Hagiwara.

To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net;Archana Narayanan in Dubai at anarayanan16@bloomberg.net;Matthew Martin in Dubai at mmartin128@bloomberg.net

To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, ;Stefania Bianchi at sbianchi10@bloomberg.net, Amy Thomson, Shaji Mathew

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