RRJ, Blackstone boost holding in Cheniere Energy
RRJ Capital and GSO Capital, The Blackstone Group’s credit arm, have bought the bulk of $372 million in shares issued by Cheniere Energy Partners, a limited partnership that controls America’s fire liquefied natural gas (LNG) export plant.
Cheniere Energy Partners is majority-owned by Cheniere Energy, a US-based company that has already received substantial investment from China Investment Corporation (CIC) and Government of Singapore Investment Corporation (GIC).
According to a regulatory filing, the limited partnership sold 17.6 million common units at $20.75 per unit, primarily to affiliates of RRJ and GSO. It will use the proceeds to cover costs tied to the liquefaction project being developed next to the Sabine Pass LNG terminal in Louisiana. Production is expected to start in late 2015, with the first LNG exports to follow shortly afterwards.
RRJ Capital, which was set up by former Goldman Sachs banker Richard Ong, and Singapore sovereign wealth fund Temasek Holdings invested $468 million in Cheniere Energy last May. The capital underpinned a $500 million commitment to Cheniere Energy Partners. Blackstone invested $1.5 billion in the limited partnership and then reportedly led a round of funding that saw CIC and GIC each put about $500 million.
A Cheniere presentation released earlier this month - prior to the most recent share issue - states that RRJ and Temasek own approximately 13% of the parent company while Blackstone holds a 31.8% interest in Cheniere Energy Partners. It is possible that the CIC and GIC commitments were structured as co-investments overseen by Blackstone.
The Sabine Pass project already has LNG sale and purchase agreements lined up with BG Group, Gas Natural Fenosa, Korea Gas, GAIL and Total Gas & Power that will kick in once production starts. Cheniere expects global LNG imports to rise from 303 million tons per annum in 2015 to 511 million tons by 2030. Asia will account for 60% of this demand.
RRJ reportedly reached a final close of $3.5 billion on its second fund earlier this month. Ong runs RRJ with his brother Charles who was seconded to the private equity firm by Temasek in 2011. Temasek is a frequent co-investor, particularly in natural resources assets in North America, which are seen as strategically aligned with Asia's energy needs.
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