Sempra has recently unveiled a series of significant strategic initiatives that are designed to propel its corporate strategy forward. The company is actively pursuing five key value creation programs with the overarching goals of streamlining its operational framework, enhancing its financial performance, and systematically reducing inherent business risks.
These initiatives are expected to solidify Sempra’s capacity to deliver sustained and improved earnings growth, ultimately leading to greater benefits for its diverse customer base and the communities it serves across its various operating regions.
A pivotal announcement in this strategic shift involves Sempra’s agreement to divest a 45% equity interest in Sempra Infrastructure Partners, a prominent energy infrastructure platform in North America. This stake is being sold to affiliates of KKR, a globally recognized investment firm, in conjunction with the Canada Pension Plan Investment Board (CPP Investments). The transaction, subject to customary adjustments, implies an impressive equity value of $22.2 billion for Sempra Infrastructure Partners and an enterprise value reaching $31.7 billion.
The financial arrangement for this sale is structured to provide Sempra with a phased receipt of the $10 billion in proceeds. Approximately 47% of the cash is anticipated to be received upon closing of the deal, with an additional 41% expected by the end of 2027. The remaining balance will be paid out roughly seven years after the transaction’s completion. This staggered payment schedule is strategically designed to enable Sempra to generate attractive post-closing interest income, allowing the efficient reinvestment of these proceeds over time into crucial capital expenditures for its U.S. utilities. The closing of this significant transaction is projected to occur sometime between the second and third quarters of 2026, contingent upon obtaining necessary regulatory approvals and satisfying other closing conditions.
Upon the successful completion of the sale, a consortium led by KKR will emerge as the majority owner of Sempra Infrastructure Partners, holding a 65% equity stake. Sempra will maintain a 25% interest in the venture, alongside the Abu Dhabi Investment Authority’s (ADIA) existing 10% ownership. The agreement also includes provisions that grant both Sempra and ADIA certain minority rights within Sempra Infrastructure Partners, ensuring their continued influence.
This strategic divestment is expected to yield several key benefits for Sempra. It is anticipated to bolster the company’s credit profile and lead to the deconsolidation of Sempra Infrastructure Partners from its financial statements. Furthermore, the deal is designed to improve Sempra’s overall business mix, with a strategic objective of achieving approximately 95% of its earnings from regulated U.S. utilities. Notably, this transaction also eliminates the need for equity issuances previously outlined in the company’s 2025-2029 capital plan.
Beyond the financial restructuring, Sempra also announced a significant development regarding the Port Arthur LNG project. Sempra Infrastructure Partners has reached a final investment decision to proceed with the development, construction, and operation of Port Arthur LNG Phase 2. This new phase will involve the construction of two natural gas liquefaction trains, a new LNG storage tank, and related facilities, boasting a nameplate capacity of approximately 13 million tonnes per annum of U.S.-produced liquefied natural gas. The incremental capital expenditures for Phase 2 are estimated to be around $12 billion, in addition to an approximate $2 billion payment for shared common facilities. Commercial operations for Trains 3 and 4 are expected to commence in 2030 and 2031, respectively.
The funding for Phase 2 is supported by an equity investment spearheaded by Blackstone Credit & Insurance, in collaboration with an investor consortium that includes KKR, Apollo-managed funds, and Private Credit at Goldman Sachs Alternatives. Collectively, these investors have acquired a 49.9% minority equity interest in the project for $7 billion, while Sempra Infrastructure Partners has retained a 50.1% majority stake.
In a further sign of progress, Sempra Infrastructure Partners has secured 100% equity financing and has also entered into a contract with the global engineering, construction, and project management firm Bechtel. Bechtel has received full notice to proceed with the project. The continued involvement of Bechtel, as it transitions from Phase 1 to Phase 2, is expected to generate favorable economic outcomes and help mitigate execution risks by leveraging efficiencies and accumulated knowledge across both phases of the project.
Phase 2 of the Port Arthur LNG project is already fully subscribed with long-term offtake agreements. These include 20-year sales and purchase agreements with strategic partner ConocoPhillips, serving as the anchor, along with other high-quality counterparties, such as EQT, JERA Co., Inc., and Sempra Infrastructure Partners. In line with industry practices, Sempra Infrastructure Partners anticipates entering into additional offtake agreements periodically, further to enhance the overall financial value of the project.
Advisors/counsel: Morgan Stanley acted as financial advisor, and Milbank acted as legal counsel to Blackstone (BXCI). BofA Securities is serving as financial advisor to Sempra on the referenced Sempra Infrastructure Partners equity sale transaction, while Sullivan & Cromwell is serving as legal advisor to Sempra. Citi is serving as financial advisor, and Simpson Thacher is serving as legal advisor to KKR. Kirkland & Ellis is serving as legal advisor to CPP Investments. For the Port Arthur Phase 2 project, Goldman Sachs acted as the exclusive Structuring Agent for Sempra Infrastructure Partners. Sullivan & Cromwell and Baker Botts served as legal counsel to Sempra Infrastructure Partners.
KEY QUOTES:
“The transactions announced today further Sempra’s corporate strategy by advancing the company’s capital recycling program and transition to a leading U.S. utility growth business.”
“The transaction announced today underscores our commitment to extend our strategic partnership with KKR, with whom we have a shared vision of improving America’s position as a global leader in LNG exports. It also directly supports our five value creation initiatives designed to simplify our business, efficiently fund strong utility growth in Texas and California and improve our financial strength.”
Jeffrey W. Martin, chairman and CEO of Sempra
“Over the past four years, we have developed a close relationship with the Sempra Infrastructure Partners team and a deep understanding of their business. We are excited to grow this strategic partnership and are pleased to welcome CPP Investments alongside us as we work to expand Sempra Infrastructure Partners’ assets to help meet growing global demand for energy.”
Raj Agrawal, Global Head of Real Assets at KKR
“We are proud to partner with Sempra Infrastructure on this critical project which will help address rising global energy demands. The partnership highlights Blackstone’s focus on providing large scale and flexible high-grade capital solutions to the world’s leading corporations.”
Rick Campbell, Senior Managing Director, Blackstone Credit & Insurance
“This investment led by Blackstone Credit & Insurance represents an important step forward in the advancement of Port Arthur LNG Phase 2. We recognize the strength of this distinguished group of investors who share our commitment to delivering reliable energy to global markets. This milestone reflects the strength of our team and our strategy to build world-class infrastructure that supports energy security and economic growth.”
Faisel Khan, Senior Vice President and Chief Financial Officer, Sempra Infrastructure
