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Blackstone, KKR and Brookfield have agreed a $16bn deal to take a stake in Kuwait’s national oil pipelines network in the Gulf state’s largest-ever foreign investment as it raises capital to pay for the cost of Iranian attacks.
The private equity giants will collectively take a 49 per cent share in a joint venture with Kuwait’s national oil and gas company that will take a long-term lease over the country’s 320km pipeline network and rent back the right to use it, they said in a statement.
The deal will generate nearly $8bn in upfront proceeds for the country and help achieve Kuwait Petroleum Company’s target of 4mn barrels per day of crude oil production capacity by 2035 by boosting its capital expenditure.
Kuwait said that the deal represented a vote of confidence by three of the world’s most influential investors in the region’s long-term economic potential despite the military confrontation between the US, Israel and Iran in which the Gulf states have become embroiled.
“This transaction sends a powerful signal that Kuwait continues to rise as an attractive destination for global capital, even amid a challenging regional environment,” said Shaikh Nawaf Saud Al-Sabah, deputy KPC chair and chief executive.
In recent months Iran has struck its neighbours’ critical infrastructure assets, including oil and gasfields, ports and refineries.
Kuwait has been targeted by nearly 1,400 missile and drone attacks since the conflict began in late February. It has said that Tehran attacked its airport, oil infrastructure and water desalination plants that are vital to its drinking water needs.
In response to the attacks, Gulf states are shoring up their finances and raising fresh capital to absorb the economic shock and to pay for repairs to damaged infrastructure.
Kuwait raised $6bn through bond sales just days ago.
Kuwait’s fellow Gulf energy producers Saudi Arabia and Abu Dhabi have made similar energy infrastructure deals in recent years, raising billions of dollars in foreign capital by selling minority stakes in strategic assets.
Blackstone, Brookfield and KKR rank among the world’s largest infrastructure investors and have expanded their presence across the Middle East in recent years.
Kuwait has a $1tn sovereign wealth fund but is often regarded as one of the Gulf’s laggards in attracting private capital. Recently it has been trying to attract more foreign investment. Last year, firms including BlackRock and Goldman Sachs opened offices in the country.
In a statement released on Saturday, Blackstone chief executive Stephen Schwarzman said Kuwait was “a compelling destination for international capital” thanks to its abundant wealth and efforts to diversify its economy.
