KKR will take 25% of Eni's biofuel unit valued at $13 billion.

The U.S. Fund KKR has bought a 25% stake of Enilive's biofuels business, owned by the Italian energy company Eni. This deal values Enilive at 12.7 billion dollars ($11.75 billion), including debt.

Eni said that KKR’s 2,94 billion euro acquisition improves Eni’s financial position and ensures it retains its control over Enilive.

This deal is part Eni's'satellite strategy' to attract co-investors for growth businesses. The strategy aims to raise funds for Eni's decarbonisation of its products.

Claudio Descalzi, CEO of Eni, said: "This agreement represents a significant step forward in our business strategies related to energy transition."

Eni will sell Enilive shares to KKR for 2.438 billion euro, and 500 million euros will be raised for Enilive's capital.

Eni will inject 500 millions euros into Enilive prior to the closing of the deal, ensuring that it is debt-free.

Alberto Signori is a partner with KKR’s European Infrastructure team. He said: "This (deal), aligns with our strategic goal to support transformative projects in energy across Europe."

KKR is an investor in Italy and has recently completed a deal for the purchase of Telecom Italia’s fixed-line networks.

Satellite Strategy

Biraj Borkhataria, an analyst at the Royal Bank of Canada, said that this deal gave Eni more credibility after a similar transaction was made for another unit.

Energy Infrastructure Partners, a Swiss asset manager, agreed in March to purchase a minority stake of Eni's renewables division Plenitude.

Last month, sources said that U.S. funds Stonepeak & Apollo were in discussions with Eni about the sale of a potential second stake in Enilive.

In the coming years, biofuels will play a key role in decarbonising trucking, aviation and shipping.

Enilive has bio-refineries both in Italy and abroad. These refineries produce biofuels from waste and vegetable oils, a part of which comes from the group's agricultural business in several African countries.

In 2025, the subsidiary's core earnings are expected to increase from this year's estimated 1 billion euro to 1.2 billion in 2025.

Eni was advised by JP Morgan, Mediobanca and Kirkland & Ellis. KKR was advised by UniCredit and Deutsche Bank, while Kirkland & Ellis acted as legal counsel.

(source: Reuters)