Sempra Brings KKR on Board

Sempra Energy has agreed to sell a 20% interest in its LNG-heavy new business platform, Sempra Infrastructure Partners (SIP), to investment firm KKR for $3.37 billion in cash. The KKR buy-in is part of a Sempra restructuring announced in December, which sought to simplify the company's non-utility infrastructure investments under one self-funding platform (LNGI Dec.2'20). SIP owns, among other assets, an LNG portfolio consisting of up to 45 million tons per year of LNG export capacity in development, construction or operation on the North American Pacific and Gulf Coasts, including the recently sanctioned Energia Costa Azul LNG project in Mexico (LNGI Nov.17'20). It also holds Mexican renewable power generation assets and cross-border natural gas infrastructure. Sempra was arguably the most bullish North American LNG developer pre-Covid-19 -- and did manage the world's only final investment decision on LNG infrastructure during 2020, at Costa Azul. But the firm has taken its foot off the accelerator for 2021 (LNGI Feb.25'21). This transaction values SIP at approximately $25.2 billion, Sempra says, and will help fund Sempra Energy's $32 billion capital program and strengthen its balance sheet. "Over the next decade, we expect the energy markets in North America to continue to grow and become increasingly integrated. Combining our resources with KKR improves our ability to capture new investment opportunities in cleaner forms of energy and the critical infrastructure that stores and transports it," Sempra CEO Jeffrey Martin said of the deal. This is not KKR's first foray into the LNG space. The infrastructure firm bought a majority stake last year in the Coastal GasLink Pipeline Project that will feed LNG Canada (LNGI Jan.17'20). "This [latest] transaction also sends a clear signal about the value and expected growth of our infrastructure portfolio," added Martin. Sempra hopes the SIP platform, with KKR's participation, can serve as a vehicle for "innovation and potential new investments in renewables, hydrogen, ammonia, energy storage and carbon sequestration," the company says. KKR's entry should close by midyear. Michael Sultan, Washington