Sempra Energy (SRE -0.90%) has agreed to sell a 20% interest in Sempra Infrastructure Partners to leading global investment company KKR (KKR 1.93%) for $3.37 billion in cash. The energy company is combining its non-utility infrastructure assets -- including Sempra LNG, a leading developer of liquified natural gas export infrastructure; and IEnova, a leading developer of renewable energy and natural gas infrastructure in Mexico -- into a new business platform. The deal values Sempra Infrastructure Partners at $25.2 billion, including its $8.37 billion in debt.
This transaction will do two things for Sempra Energy. First, it will simplify the company's non-utility infrastructure investments under one self-funding platform. That will enable Sempra Energy Partners to increase its scale, unlock cost-saving synergies, highlight its value, and better position it for growth. By combining its resources with KKR, Sempra Energy will be able to capture new clean-energy investment opportunities.
On top of that, the transaction will also provide Sempra Energy with cash proceeds to strengthen its balance sheet and fund the expansion of its core U.S. utility operations. The company currently has a $32 billion capital program underway to grow its U.S. utility operations. Sempra Energy expects that the deal will be accretive to its earnings because it's reinvesting the cash proceeds from the sale into expansion projects.
The deal completes Sempra Energy's plan to combine its non-utility infrastructure assets into one self-funding entity, which it unveiled last December. That will allow the energy company to focus on growing its U.S. utility operations and North American infrastructure, which it believes will create significant shareholder value as the continent's energy markets keep growing and become increasingly integrated.