Samsung Asset in $12.4 bn oil pipeline stake purchase

South Korea's Samsung Asset Management Co. has participated in a $12.4 billion acquisition of a 49% stake in Aramco Oil Pipelines Co., a unit of Saudi Aramco, as an equity investor, according to a local newspaper.

Last week, Aramco announced the closing of the share sale in the pipeline company to a consortium including Washington D.C.-based EIG Partners and Abu Dhabi-based Mubadala Investment Co.

After the stake deal, Aramco continues to hold the remaining 51% stake in the pipeline unit, alongside full ownership and operational control of the latter's crude oil pipeline network.

The Saudi oil company said the consortium consisted of a broad cross section of investors from North America, Asia and the Middle East, but did not identify them except for EIG and Mubadala, a sovereign investor of the United Arab Emirates.

According to an Invest Chosun report on June 18, the consortium will make a combined equity investment worth $2 billion and raise an additional $10.4 billion in senior loans to finance the transaction. 

As a consortium member, Samsung Asset is securing a 5% stake in Aramco Oil Pipelines for $100 million. Investors in the Samsung vehicle set up for the stake purchase are expected to earn around 9% of their investment per annum, the online news outlet added. 

EIG Partners is an energy-focused private equity firm and runs six offices around the world, including one in Seoul. Mubadala manages $243 billion in assets.

As part of the stake deal, Aramco Oil Pipelines will lease its crude oil pipelines to parent company Aramco and receive a tariff under a 25-year agreement. The tariff will be backed by Aramco's minimum volume commitments. 

The transaction does not impose any restrictions on Aramco’s actual crude oil production volume, the oil giant said.

Edited by Yeonhee Kim