Ares, Banks to Fund KKR’s Buyout of Minority Stake in Eni Unit

(Bloomberg) -- Ares Management Corp. and a group of banks is funding KKR & Co.’s buyout of a minority stake in Italy’s Enilive.

KKR will use around €1.5 billion ($1.6 billion) of debt, of which Ares is to provide €700 million in infrastructure financing, with the banks underwriting the rest, said a person with knowledge of the matter. The lenders include both international and Italian banks, the person said, on the condition of anonymity.

The US investment firm is paying over €2.9 billion in total to purchase a 25% stake in the unit of Eni SpA, according to a statement from Eni on Thursday. This gives Enilive, Eni’s biorefining and mobility unit, a total valuation of around €11.8 billion. 

Representatives for KKR and Ares declined to comment.

The move by Ares follows increasing interest by private capital in infrastructure debt. In a paper published at the beginning of the year, Ares said that this asset class could reach $1.5 trillion in size, as constrained public investment and bank retrenchment has created a supply and demand imbalance for funding. 

For energy company Eni, the sale of a stake in Enilive is a step in a development strategy to attract financial partners for its subsidiary businesses. The strong interest shown by institutional investors in the Enilive sale process could lead to the disposal of a further stake, with Eni’s chief financial officer Francesco Gattei saying Friday that could be in the “lower end of the range of 5% to 10%.”

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