EIG Plans New Fund to Retain Aramco Oil Pipeline Stake, Add Investors
EIG Global Energy is exploring a new fund structure to extend its ownership of Saudi Aramco’s oil pipeline assets, signaling continued investor interest in long-term Gulf pipeline infrastructure.
(Reuters) — EIG Global Energy Partners has hired PJT Partners to advise on structuring a new fund for its stake in Saudi Aramco's oil pipeline assets as the vehicle holding it nears expiry, two sources familiar with the matter said.
The so-called continuation fund would allow the U.S.-based infrastructure investor to roll over the Aramco pipeline stake — bought in 2021 — keeping it for longer and bringing in new investors, the sources said.
EIG, PJT Partners and Aramco did not immediately respond to a request for comment.
A continuation fund allows a firm to extend ownership of an asset beyond the original fund's lifecycle. When funds near their term limits - typically five years - firms can either sell assets to return capital to investors or use continuation funds to retain high-performing holdings while offering existing investors an exit.
An EIG-led consortium invested in Aramco Oil Pipelines in a deal valued at $12.4 billion in 2021, acquiring a 49% stake in a new entity that holds lease rights to Aramco's stabilized crude oil pipelines network.
The continuation fund structure has become increasingly popular among private equity and infrastructure firms seeking to hold on to companies for longer while providing existing investors with liquidity options.
The Aramco Oil Pipelines entity operates under a 25-year lease agreement, generating tariff payments based on crude volumes transported through thousands of kilometers of pipelines across Saudi Arabia.
The move adds to a growing secondary market for Gulf pipeline assets. In April 2024, BlackRock and KKR sold their ADNOC Oil Pipelines stake to Abu Dhabi's Lunate.
Kuwait Petroleum Corp. is preparing an oil pipeline stake sale that could raise up to $7 billion, while Saudi Aramco is looking to sell gas-fired power plants for around $4 billion, Reuters reported this week.