UAE’s Kentech Agrees to Buy Energy Unit of Canada’s SNC Lavalin
(Bloomberg) -- Canada’s SNC-Lavalin Group agreed to sell its oil and natural gas services business to Kentech Corporate Holdings Ltd., as the Dubai-based firm seeks to expand in markets such as the U.S. and Saudi Arabia.
The sale is expected to be completed in the second quarter and will create a business with a project backlog of $1.1 billion, Kentech Chief Executive Officer John Gilley said in an interview. Kentech, which didn’t disclose deal terms, will finance the transaction with equity and debt, he said.
HSBC Holdings Plc will provide receivables-backed financing for the deal and Kentech’s main shareholder, the private equity firm Blue Water Energy, will put in its own equity, Gilley said. The combined company may be listed via an initial public offering in the next five years, Gilley said.
Energy producers have suffered over the past year as the coronavirus pandemic hammered economies and oil prices plummeted. Oil and gas firms had to cancel projects and cut spending. Gilley said the current “buyer’s market” gave Kentech the chance to pick up assets at a good price.
Kentech will also benefit as fossil fuel producers move toward cleaner energy, he said.
The transaction “gives us that engineering capability, but also the capability to get into the fast-growing energy transition space,” Gilley said. “Our clients are the four or five international oil companies and the national oil companies and we’re going to follow them as they move into their energy-transition strategy.”
Founded in Ireland in 1919, Kentech provides energy engineering and contracting services from Dubai, the business hub of the United Arab Emirates.
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