Italian energy major Eni said on Tuesday it had signed an exclusivity agreement with investment firm KKR to proceed with the due diligence phase in a potential sale of 20-25% in its biorefining and smart mobility solutions provider Enilive, based on a valuation of the company of between $12.5 billion (11.5 billion euros) and $13.6 billion (12.5 billion euros).
"This step represents another example of the development of Eni's satellite model strategy, attracting strategically aligned capital from valuable new partners at attractive multiples, funding our growth, and confirming the value we are creating in these new businesses," Eni said in a statement.
Considering the strong interest from leading institutional financial investors, Eni could subsequently sell a further stake of up to 10% of Enilive, the Italian firm said.
For years, Eni has been taking a different approach to conventional and green energy development, unlike any of the other international oil and gas firms. The Italian major is divesting or creating joint ventures to operate oil and gas assets internationally while grouping some low-carbon initiatives and projects into separate firms.
Key to these spin-offs and the so-called 'satellite strategy' are the separate balance sheets of the companies.
"The satellite model is an approach we have built to have additional funding sources to keep together the need to meet demand for traditional products, while also developing new, greener products," Eni's chief financial officer Francesco Gattei told Reuters earlier this year.
For example, Eni agreed at the end of last year to sell a 9% stake in its low-carbon energy unit Plenitude which valued the business at around $10.8 billion (10 billion euros). Plenitude is active in the market of power generation including renewable energy sources, the sale of energy and energy solutions, and an extensive network of EV charging points.
Eni also reached this year an agreement with major UK oil and gas producer Ithaca Energy to combine substantially all of its upstream assets in the UK, excluding East Irish Sea assets and CCUS activities, in "a strategic move to significantly strengthen its presence on the UK Continental Shelf."
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More