Sempra to Sell 10% Interest in Sempra Infrastructure Partners for $1.8B

Sempra (NYSE: SRE) has agreed to sell 10% of its non-controlling interest in Sempra Infrastructure Partners to a subsidiary of the Abu Dhabi Investment Authority (ADIA), in an all-cash deal worth $1.785 billion.

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Based in the U.S., Sempra is an energy infrastructure company with a primary focus on electric and natural gas infrastructure.

Details of the Transaction

The deal price implies an enterprise value of $26.5 billion for Sempra Infrastructure, including asset-related debt of $8.6 billion.

Earlier this year in October, Sempra sold another 20% non-controlling interest in Sempra Infrastructure to KKR’s wholly-owned affiliate. With the current sale agreement, Sempra will hold a 70% controlling stake in Sempra Infrastructure.

Based on the size of the investment, ADIA will have certain customary minority rights in Sempra Infrastructure.

The deal, expected to be accretive to earnings, will close in the summer of 2022, subject to certain regulatory approvals.

Sale proceeds to Fund CAPEX and Buybacks

Sempra intends to use the sale proceeds to help fund incremental capital expenditures at Sempra’s utilities.

Furthermore, the company will make share repurchases worth $500 million. Notably, the company has already completed buybacks worth $300 million in the fourth quarter of this year.

CEO Comments

Sempra CEO, Jeffrey W. Martin, commented, “We are excited to add ADIA to the partnership at Sempra Infrastructure. As an investor with a global footprint, we expect ADIA will help our team build out a growth platform with an increasingly global capability,”

He further added, “The timing of the transaction is attractive because it allows us to efficiently rotate capital into a growing set of investment opportunities at our utilities and return capital to our owners in the form of share repurchases. This transaction allows us to do both, while also supporting our balance sheet.”

Analysts Recommendation

Following the news, UBS analyst Ross Fowler increased the price target on Sempra Energy to $177 (38.9% upside potential) from $168.

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 5 Buys and 5 Holds. The Sempra Energy stock prediction of $148 implies 14.4% upside potential to current levels.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 100% Bullish on Sempra stock, compared to a sector average of 68%.