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Global conglomerate gains choke-hold on Canada’s Inter Pipeline
Gary Park for Petroleum News
A battle of the ages to secure a prized bundle of Canadian energy assets has fueled the growth of a new-age global energy conglomerate.
It needed four offers by Brookfield Infrastructure Partners, BIP, to convince the embattled Inter Pipeline to dump a friendly deal with rival Pembina Pipeline in favor of the company that has accumulated US$344 billion in assets and is fast spreading its wings in the energy sector.
The latest chapter in a year-long hostile bidding war resulted in Inter advising its shareholders to accept an C$8.6 billion takeover offer from Brookfield to acquire Canada’s fourth-largest midstream company, forcing Inter to pay Pembina a C$350 million break fee to terminate their arrangement.
Asset fight The fight was concentrated on Inter’s assets that could fit into a larger pipeline network that may eventually include the Trans Mountain pipeline expansion.
Analysts believe Pembina was primarily interested in Inter’s natural gas liquids business, while viewing Brookfield’s overriding desire as locking up oil sands pipelines.
“The industrial logic of combined Pembina and Inter remains unparalleled and the value creation between certain of our assets is impossible to replicate by any other entity,” said Pembina Chief Executive Officer Mick Dilbert.
He said that, despite its disappointment, Pembina will now look for fresh acquisition opportunities.
RBC Capital Markets analyst Robert Kwan said Brookfield has even floated a proposal which could eventually see it sell off parts of Inter to Pembina, including a natural gas liquids businesses.
US$7 billion In the meantime, Brookfield Asset Management, BAM - which holds 31% of BIP - has raised US$7 billion from major institutional investors in Singapore and Canada to establish the largest pool of private money aimed at accelerating the shift to achieving net-zero carbon emissions.
BAM said its Global Transition Fund could reach its limit of US$12.5 billion before the end of 2021, demonstrating how institutional investors such as pension funds have broadened their reach to include seeking big technological solutions to climate change.
The fund plans to reduce greenhouse gas emissions, decrease energy consumption and boost low-carbon energy capacity.
Mark Carney, former governor of the Bank of Canada then the Bank of England, is now co-managing the Global fund.
He said the transition to net-zero will require more than investments in existing renewable energy projects and technology.
He said energy companies, utilities, tech firms and industrial companies will require trillions of dollars in capital to transform their operations by slashing carbon emissions to head off the most devastating impacts of climate change.
- GARY PARK
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