On Our Radar: Deals we are paying attention to for their impact on industry.
With the announcement on April 8 that it would acquire a large stake in Spanish oil company Cepsa, private equity giant Carlyle Group added to its already formidable presence in the oil and gas industry.
The Washington D.C.-based company will purchase a 30% to 40% position worth about $4.8 billion in Cepsa from the Mubadala Investment Company. Abu Dhabi-based Mubadala will continue as the majority partner in Cepsa.
The transaction is expected to be completed by year’s end.
Carlyle, which has $216 billion in assets, holds positions in a range of oil and gas companies and has been active in seeking new opportunities. “Carlyle is looking to put their money to work,” Patrick Davitt, an analyst at Autonomous Research, told Karma Network. “They have a lot of money available to acquire assets.”
Davitt added: “There are a lot of assets up for sale in the Middle East, which is good for them.”
The head of Carlyle International Energy Partners, Marcel van Poecke, told CNBC’s Street Signs that “a core strategy” of his fund is “to invest in strong oil and gas companies, which we like to grow with our capital and, preferably, very strong partners.”
Carlyle International Energy Partners focuses on exploration, processing and oilfield services outside North America.
Van Poecke said that he was was optimistic about the energy sector’s growth prospects. “There is a lot happening,” he added. “You will see a growing oil demand through the 2040s. You will see a steeper demand for natural gas.”
He also believes that demand will increase for petrochemical-based products and renewable energy.
The deal represents a dramatic turn for Mubadala, which was established in 2017 to diversify the economy of the United Arab Emirates capital. Last year, with the stock market in free fall, the company suspended its plans for a public offering of a 25% stake in Cepsa.
Mubadala’s CEO for petroleum and petrochemicals, Musabbeh Al Kaabi, said in a statement that he was looking forward to teaming up with Carlyle.
"This represents an important milestone in Cepsa's 90-year history,” Al Kaabi said. “Mubadala has worked closely over the years with Cepsa's management team to build a world-class fully integrated energy company. We now look forward to working in partnership with Carlyle, which has a significant track record and energy sector capabilities, and with Cepsa’s management to further enhance and grow the business.”
He added: “We share a common view about the strength and potential of Cepsa’s business and are confident in the company’s ability to continue its excellent operational and financial performance.”
James Peter Rubin is a veteran journalist who has written and edited for CapitalWatch, ThirtyK, TheStreet.com, Forbes and the Economist Group, among other media outlets.