DUBAI: EIG Global Energy Partners has hired PJT Partners to advise on forming a new fund for its stake in Saudi Aramco’s oil pipeline assets as the holding deadline approaches, two sources familiar with the matter said.
The so-called continuation fund will allow U.S.-based infrastructure investors to roll over Aramco pipeline shares they bought in 2021 and hold them for longer periods of time to attract new investors, the people said.
EIG, PJT Partners and Aramco did not immediately respond to requests for comment.
Continuing funds allow companies to extend ownership of assets beyond the lifecycle of the original fund. As a fund approaches its term limit (usually five years), companies can either sell assets and return capital to investors, or use a continuation fund to provide an exit to existing investors while retaining blue-chip stocks. An EIG-led consortium invested in Aramco Oil Pipelines in 2021 in a deal valued at $12.4 billion, acquiring a 49% stake in the new entity that holds the lease rights to Aramco’s stabilized crude oil pipeline network. Continuation fund structures are becoming increasingly popular among private equity and infrastructure firms looking to hold onto companies for the long term while providing liquidity options for existing investors.
The Aramco oil pipeline entity operates under a 25-year lease agreement and generates toll payments based on the volume of crude oil transported through thousands of kilometers of pipelines across Saudi Arabia. This move expands the secondary market for Gulf pipeline assets. In April 2024, BlackRock and KKR sold their stake in the ADNOC oil pipeline to Abu Dhabi’s Lunate.
Kuwait Oil Corporation is preparing to sell an oil pipeline interest that could raise up to $7 billion, while Saudi Aramco is considering selling a gas-fired power plant for about $4 billion, Reuters reported this week.
(Reporting by Hadeel Al Sayeg; Editing by Emelia Sithole-Matarise)
