Enagás teams up with Blackstone to invest in US energy company Tallgrass Energy

11 March 2019

• Tallgrass Energy is a US energy infrastructure company that owns, among other assets, 11,000 km of transmission pipelines
• The transaction fits Enagás' strategy of investing in core business assets in growth markets alongside strategic partners with which it can expand through international projects
• As an industrial partner, Enagás will have a seat on the company's Board of Directors, contributing its know-how in operating and developing energy infrastructure

Enagás has entered into an agreement with affiliates of Blackstone Infrastructure Partners and GIC (Singapore’s sovereign wealth fund) to invest $590 million for a 10.93% indirect ownership interest in Tallgrass Energy LP (“TGE”).

Enagás investment is in the holding company that owns 100% of TGE’s general partner, as well as approximately 43.91% of the economic interests in TGE*. The investment is structured with Blackstone retaining a majority, GIC retaining a minority, and Enagás owning 24.90% of the holding company at closing.

Following the closing, Enagás has agreed to acquire an additional 3.52% of the holding company for approximately $83 million, subject to completion of certain conditions precedent.

Enagás has also agreed to invest up to $300 million in future investments in TGE, as more fully described in Item 6 of the Schedule 13D filed by Enagás with the U.S. Securities and Exchange Commission.

This transaction fits Enagás' strategic plan of investing in core business assets in stable markets offering growth opportunities identified as priority markets in the company's Strategic Plan (Europe and Pacific Axis: Mexico, Peru, Chile, Colombia and the United States) maintaining strict international investment criteria.

Enagás will make available to its co-investors its know-how in developing, operating and maintaining gas infrastructures. Moreover, knowledge of international markets will enable Enagás to assess other investment opportunities, in line with the strategy already announced in this respect.

Wallace Henderson, Senior Managing Director in Blackstone Infrastructure Partners declares: “We are delighted to welcome Enagás as an industrial partner into our consortium. With extensive midstream operations around the world, they bring valuable perspectives to Tallgrass that will benefit our investment and we look forward to their contributions”.

As an industrial partner, Enagás will have a seat on TGE’s Board of Directors.

Tallgrass is a US energy infrastructure company founded in 2012. It owns three inter-state gas pipelines regulated by the Federal Energy Regulatory Commission (FERC), with a total of 11,000 km of gas transmission pipelines, 2,400 km of gas gathering pipelines and a 1,300 km oil pipeline.

The US boasts some of the world's greatest growth opportunities for midstream infrastructure. Specifically, Tallgrass has a pipeline of projects for the US market in which Enagás could take part. It also boasts a broad base of customers and take or pay contracts, which bode well for sustainable dividends and EBITDA.

Enagás embarked on its internationalisation in 2011 as a part of an ongoing strategy with two main objectives: maintaining the maximum efficiency and security in the operation of the Spanish gas system, and to continue expanding as a company, therefore maintaining and increasing employment as well as upholding shareholders' trust. This international expansion also helps drive the business of other Spanish industrial companies related to the energy sector. This acquisition allows Enagás to unlock the value of its vast experience in developing and operating gas infrastructure and strengthen its position as industry leader and expert.

As part of its strategy, Enagás considers, as an alternative to growth, partnership agreements with leading firms so both can expand internationally.

*Through the ownership of Class A and B Shares. Class A Shares are listed on the New York Stock Exchange.


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