HedgeCo.Net — Funds managed by Blackstone Credit & Insurance, together with four Canadian institutional investors, have agreed to invest $3.1 billion to acquire a 49.9% non-controlling interest in a Mitsubishi Corporation subsidiary that holds Mitsubishi’s interest in the LNG Canada export terminal, Blackstone announced on November 2. The investor group includes CPP Investments, OMERS, the Investment Management Corporation of Ontario and PSP Investments.
Mitsubishi will remain the controlling partner and keep its full share of LNG offtake. The subsidiary holds a 15% interest in LNG Canada, a joint venture that also includes Shell, PetroChina, Petronas and KOGAS, according to CBC. LNG Canada is Canada’s first large-scale LNG export terminal, and its Phase 2 expansion, once complete, will double capacity to 28 million tonnes per annum.
Rick Campbell, a senior managing director at Blackstone Credit & Insurance, described the firm as a financial partner supporting one of Canada’s most significant energy projects. Geoff Souter, who heads real assets credit at CPP Investments, called the asset high quality and strategic, with attractive return potential for the CPP Fund. Goldman Sachs was lead structuring agent and financial advisor to Blackstone, with Scotiabank also advising.
Blackstone said the deal builds on its recent corporate solutions investments, including a CDN$7 billion investment in Rogers, a $16 billion partnership with Kuwait Oil Company and a $7 billion investment in Port Arthur LNG Phase 2. Its infrastructure and asset-based credit platform manages $140 billion.
The structure is the story. A non-controlling stake in a holding company lets a large corporate raise capital against a core asset without ceding control or offtake, and the Canadian pension funds are co-investing in a credit-led format rather than buying the asset outright.