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US takeover giant Carlyle has agreed to acquire a 30% stake in Spanish oil and gas company Cepsa from a sovereign wealth fund in Abu Dhabi on a $ 3.6 billion deal a debt.
The sale gives the company a total value of $ 12 billion, roughly the same price that the Mubadala fund sought before an unsuccessful listing attempt last year.
As part of this agreement, Carlyle reserves the right to purchase up to 40% of Cepsa, one of the largest private oil companies in Europe and owned by Mubadala for three decades. The transaction is expected to be finalized by the end of the year, subject to regulatory approval.
Carlyle will hold at least two seats on the board and Musabbeh Al Kaabi, a senior executive in Mubadala, will remain president.
Cepsa generates approximately 175,000 barrels a day of production worldwide, including its interests in two fields in Abu Dhabi. It also operates refineries and chemical plants in Spain and elsewhere, as well as several energy generating assets.
Marcel Van Poecke, Head of Carlyle International Energy Partners, said: "We look forward to continuing Cepsa's growth path for their customers, suppliers and employees."
Mubadala, which will remain the majority shareholder, said he is delighted with the prospect of "working in partnership with Carlyle, which has an important track record and capabilities in the energy sector".
Carlyle made an initial bid on Cepsa last year, but Mubadala rejected it, saying it could get better terms through an IPO, said one familiar with the file. Cepsa's planned 25% listing on the Spanish Stock Exchange was subsequently withdrawn due to its low interest and weak market conditions.
The Cepsa transaction comes after a recovery in oil prices, which this year stood at nearly $ 70 per barrel compared to less than $ 30 in early 2016, which led to bullish assumptions about trading in the US. sector.
This is also because the Washington-based private equity group is seeking to raise $ 4 billion for oil and gas assets outside of North America, while others are cutting back on their spending. The transaction, which will involve the issuance by Carlyle of a capital check of approximately $ 2.4 billion, will be funded in part by this new fund and in part by co-investors. The debt levels of the company should remain the same as part of this transaction.
Potential bidders expressed concern over the Spanish energy company's participation in a project partially funded by 1Malaysia Development Berhad, a public fund under investigation for money laundering.
The money diverted from 1MDB was used to partially finance the $ 2.2 billion acquisition of Coastal Energy, based in Houston, alongside International Petroleum Investment Company, an entity based in Abu Dhabi since its merger with Mubadala, announced US prosecutors.
Cepsa's IPO prospectus warned that the US Department of Justice had claimed that the Coastal Energy transaction was "part of a broader plan to fight money laundering".
People familiar with the Cepsa sale said Carlyle had been a preferred bidder for an agreement with Mubadala, a long-time investor in the US buyout group's funds.
Other interested parties included New York-based Blackstone Asset Managers and the Canadian Provident Group, the CPP Investment Board, among others.
A successful agreement is the clearest sign that the concerns have been appeased.
"This is the best result for Cepsa because public markets do not seem to pay attention to the short-term movement of oil prices and do not like a company like [this], "Said one person involved in the transaction.
Carlyle has also been acquiring energy assets, including Neptune, which she created with her competitor CVC, and Varo Energy, which she has created alongside Vitol, the commodities trader.
Other reports by David Sheppard and Anjli Raval in London.
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