KKR is currently engaged in discussions with Eni regarding the acquisition of a stake in the Italian energy conglomerate’s biofuel sector, which could result in a valuation ranging from €11.5 billion to €12.5 billion, including debt.
The discussions center on KKR buying up to 25% of Enilive, potentially valuing this stake at around €3.1 billion, surpassing some earlier projections by analysts.
Eni’s Strategic Diversification
Eni is looking to leverage the funds from this transaction to support its shift from traditional oil and gas towards renewable energy sources.
The move is part of a broader strategy to diversify its portfolio and reduce reliance on fossil fuels. The company has also noted significant “strong interest” from various financial institutions, which could enable it to sell an additional 10% of the business if required.
Exclusivity Agreement with KKR
A temporary exclusivity agreement has been signed between Eni and KKR concerning the stake sale. This agreement aligns with Eni’s strategic goal to attract capital from new partners to drive future growth and expansion in the renewable sector.
Previous Transactions and Current Market Sentiment
Earlier this year, Eni finalized the sale of an 8% stake in its renewable power and retail arm, Plenitude, fetching €588 million. This transaction assigned Plenitude an enterprise value exceeding €10 billion, inclusive of debt.
Despite Eni’s efforts, KKR’s interest in Enilive comes amid a period of declining investor enthusiasm for biofuels due to lackluster financial returns and insufficient government regulatory support.
Market Reactions and Analyst Opinions
The valuation of Enilive has been described as “well above market expectations,” with the stake size on sale exceeding initial forecasts.
Biraj Borkhataria, an analyst at RBC Capital, mentioned that the high price tag might positively surprise investors, especially in light of recent negative sentiment towards biofuels due to weaker margins and uncertain policy support.
Recent Eni Transactions
In recent months, Eni has also executed notable deals, such as selling most of its UK oil and gas assets to Ithaca and agreeing to transfer its upstream assets in Alaska to US-based Hilcorp. These moves are part of Eni’s strategy to divest and streamline its operations.
Eni has outlined a plan to generate €8 billion through asset sales between 2024 and 2027, reflecting its ongoing efforts to refocus and invest in renewable energy while optimizing its asset portfolio.