Sempra short of goal as it increases stake in IEnova in gas infrastructure overhaul
Sempra Energy fell short of its goal to acquire all the outstanding shares of its Mexican IEnova affiliate that it didn’t already own in an exchange offer, according to results the company released May 25.
The company said in a statement that after the stock-for-stock exchange is settled, it will own 96.4% of IEnova.
While that exceeds what Sempra said was an internal target of 95% ownership, it is still below the 100% goal that was announced in December 2020 as part of a series of transactions to simplify how it operates its non-utility energy infrastructure. Sempra said its goal remains to acquire the remaining 3.6% stake in IEnova that wasn’t tendered in the exchange, though it didn’t provide details on any plans. A spokeswoman did not respond to a message seeking comment.
Sempra hopes to leverage a new unit it created to hold its LNG portfolio, certain natural gas distribution assets and cross-border and in-country pipelines into a self-funding platform. That could boost growth, spur new investment from partners and potentially allow for a spinoff or sale of the unit, though Sempra has not said a sale of the entire unit is being considered. In April, Sempra agreed to sell a 20% stake in the new unit to private equity firm KKR for $3.37 billion.
IEnova is important to the goals for the unit, Sempra Infrastructure Partners, because the unit includes pipelines that export US natural gas to Mexico and supply the Energia Costa Azul LNG facility, where liquefaction capabilities are being added to the existing regasification terminal. IEnova operates Energia Costa Azul.
Sempra offered to exchange each outstanding IEnova ordinary share that it did not own for 0.0323 shares of Sempra common stock. Of the 433,242,720 IEnova ordinary shares eligible for participation in the exchange offer, 381,015,194 ordinary shares were validly tendered and accepted. In exchange, Sempra will issue 12,306,777 shares of its common stock to the IEnova shareholders who participated in the exchange offer, the statement said.
Settlement is expected to occur on May 28, when Sempra shares will begin trading on the Mexican Stock Exchange. Sempra shares will continue trading on the New York Stock Exchange.
In addition to the LNG export facility at Energia Costa Azul that it is building, Sempra operates Cameron LNG i n Louisiana and has proposed building an export facility in Texas, Port Arthur LNG. It envisions having a 45 million mt/year LNG portfolio at full buildout.
Final investment decisions have not yet been made for expanding Cameron LNG beyond its current three trains or building Port Arthur LNG.