US buyout giant Carlyle has entered into an agreement to buy a 30 percent stake in the Spanish oil and gas company Cepsa from an Abu Dhabi sovereignty fund, in a $ 3.6 billion deal including debt.
The sale gives the business a total business value of $ 12 billion, roughly the same price tag as the Mubadala Fund sought in advance of a failed stock exchange attempt last year.
As part of the agreement, Carlyle reserves the right to purchase up to 40 percent of Cepsa, one of the largest privately owned oil companies in Europe, and has been under Mubadala ownership for the past three decades. The agreement is expected to be at the end of the year, pending regulatory approval.
Carlyle will have at least two seats, and Musabbeh Al Kaabi, senior executive at Mubadala, will remain as leader.
Cepsa generates approximately 1
Marcel Van Poecke, head of Carlyle International Energy Partners, said: "We look forward to building on Cepsa's growth path in favor of its customers, suppliers and employees."
Mubadala, who will remain majority shareholder, said it was pleased with the opportunity to "work in partnership with Carlyle, which has a significant record and energy sector capacity".
Carlyle filed a first bid for Cepsa last year, but it was rejected by Mubadala, who thought it could get a better deal through a stock exchange flotation, said a person familiar with the case. The planned listing of 25 percent of Cepsa on the Spanish stock exchange was later withdrawn, referring to poor interest and weak market conditions.
Cepsa's transaction comes after a recovery in oil prices, which this year has reached close to $ 70 a barrel from under $ 30 at the beginning of 2016, which led to bullish conditions for dealmaking in the sector.
It also comes as the Washington-based private equity group seeks to raise $ 4 billion for oil and gas assets outside of North America, while others reel in spending. The deal, which means Carlyle writes an equity check of around $ 2.4 billion, will be funded partly by this new fund, partly by co-investors. The levels of debt in the company are expected to remain the same during this transaction.
Prospective bidders had expressed concern about the involvement of the Spanish energy company in a project that was partially funded by 1Malaysia Development Berhad, a state fund funded for money laundering.
The money misappropriated from 1MDB was used to partially fund the $ 2.2 billion acquisition of Houston-based Coastal Energy. Along with the International Petroleum Investment Company, an Abu Dhabi unit since merging with Mubadala, US prosecutors have said.
The prospectus for Cepsa IPO announced that the US Department of Justice claims that the coastal energy transaction was "part of a wider money laundering claim".
But people who were familiar with the Cepsa sales said Carlyle had been a preferred bidder for a deal with Mubadala, which has been a long-term investor in US buyout funds.
Other interested parties included the New York-based property manager Blackstone and Canadian pension groups CPPIB among others, these people said.
A successful deal is the clearest sign that worried was appetased.
"This is the biggest result for Cepsa because public markets just seem to be aware of the short-term movement in oil prices and don't appreciate a company like [this]," a person involved in the deal said. 19659002] Separately, Carlyle has been keen to look up assets, energy exchanges, including Neptun, as it created with rival CVC, and Varo Energy, which it established with Vitol's merchant.
Further reporting by David Sheppard and Anjli Raval in London.