Enbridge Inc has received higher-than-expected bids for the Canadian midstream assets it is selling as part of its debt-reduction efforts, with initial bids valuing the portfolio as high as $4.5 billion (US$3.5 billion), people familiar with the situation told Reuters.
Keyera Corp, Pembina Pipeline Corp and Husky Energy Inc’s midstream unit are among suitors that placed preliminary bids ahead of a recent deadline, the people added, declining to be named as the matter is private.
Wolf Midstream Inc, backed by Canadian Pension Plan Investment Board (CPPIB), has made a bid for some of the assets on offer, and Inter Pipeline and U.S. private equity firm KKR & Co were also said to be interested in the assets, though it was not clear if they submitted bids, the people said.
More than two dozen parties took a look at the assets in the auction, underpinning the appeal for stable cash-flow generating pipeline assets, one of the people said. Reuters previously reported that the midstream assets could fetch as much as $4 billion.
Enbridge, Canada’s biggest pipeline operator, is raising funds to pay down debt incurred from the US$28 billion Spectra Energy Corp acquisition, launched in 2016. It has set a target of $3 billion in asset sales this year, but including the two deals announced on Wednesday, it is poised to blow past that goal.
A potential $4.5 billion sale of its midstream assets, if successful, could take its asset sale proceeds this year to over $7.5 billion, helping the company to aggressively pay down its debt. Enbridge is working with Royal Bank of Canada on the sale.
Enbridge, RBC, KKR, Inter Pipeline and Husky declined to comment. Keyera, Pembina and CPPIB did not immediately respond to request for comment.
Enbridge has identified about $10 billion in non-core assets that it could sell over time, to help address long term debt standing at US$60. 87 billion as of December 31.
Update: In March, Wolf Midstream closed its $1.61 billion acquisition of MEG Energy Corp‘s 50 percent interest in Access Pipeline and 100 percent interest in the Stonefell Terminal. CPPIB invested $703 million.
(Reporting by John Tilak and David French; Editing by Denny Thomas and Chizu Nomiyama)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
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