RRJ leads $1b investment in Cheniere Energy
RRJ Capital has agreed to invest $1 billion in convertible notes issued by Cheniere Energy, a US-based liquefied natural gas (LNG) producer.
The Asia-focused private equity firm will invest from RRJ Capital II, which reached a final close of around $3.5 billion last year. According to a statement, RRJ could transfer a portion of the convertible notes to Singapore government-controlled investment fund Temasek Holdings.
The convertible notes carry an annual coupon of 4.875% and have a six-and-a-half year tenor. They will convert into Cheniere's common stock at a price of $93.64 per share, which represents 130% premium to the closing price on Monday.
The net proceeds will be used to fund Cheniere's Corpus Christi Liquefaction Project, which comprises three plants with an expected annual production capacity of 13.5 metric tons of LNG. Construction is scheduled to begin early next year, while LNG exports from the project could start as early as 2018.
"This investment highlights our long term commitment to Cheniere and is consistent with our long term view about LNG as a clean energy source, and Cheniere's strong position in that sector," said Charles Ong, co-chairman and co-CEO of RRJ.
RRJ and Temasek invested $468 million for a 19% stake in Cheniere Energy in 2012. The capital underpinned a $500 million commitment to Cheniere Energy Partners (CEP), a limited partnership that controls America's first LNG export plant.
The Blackstone Group invested $1.5 billion in CEP and then reportedly led a round of funding that saw China Investment Corp. (CIC) and GIC Private each put in about $500 million. In February of last year, RRJ and Blackstone's GSO division bought the bulk of $372 million in shares issued by CEP. The subsidiary went public on the New York Stock Exchange last year.
In August 2013, Temasek sold its stake in Cheniere, taking advantage of a spike in the company's share.
RRJ was set up by Richard Ong, formerly of Goldman Sachs and Hopu Investment. Charles, his brother, 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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