CPP Investments advances sale for TGP pipeline stake
Canadian pension fund CPP Investments is accepting non-binding bids as it looks to sell its 49.88% stake in Peruvian pipeline company Transportadora de Gas del Perú (TGP).
The investor is working with sellside financial advisor Deutsche Bank on a targeted process for which bids are coming in, according to five sources familiar with the situation.
The process has attracted a “handful of very interested parties”, according to the first source familiar.
Two of the sources said that emerging markets investor Ashmore is looking at the opportunity.
Ashmore and CPP Investments declined to comment. Deutsche Bank did not respond to requests for comment.
The network’s two other equity sponsors are Algeria’s Sonatrach, which owns 21.18%; and Spain’s Enagás, which owns 28.94%. Sonatrach did not respond to queries from Infralogic regarding their interest in selling or upping its stakes in the business. Enagás declined to comment.
Concession history and growth prospects
TGP operates Peru’s largest natural gas and liquid natural gas (LNG) transportation pipelines under a USD-denominated contract. The product is sourced from the Camisea gas field in the central Peruvian jungle and transported to the coastal cities of Lima and Ica via a gas pipeline spanning 729 kilometers (453 miles) and a liquids pipeline across 560 kilometers – both with a capacity of 920 million cubic feet per day.
The original participants in the concessionaire, which included Pluspetrol and Tecgas, from Argentina; Hunt Oil, from the USA; SK Corporation, from South Korea; and Sonatrach, signed a 33-year contract for the greenfield gas pipeline project in December 2000.
Through several transactions, CPP Investments has increased its stake in the pipeline since acquiring an initial 10.4% stake in its first Peruvian infrastructure acquisition in February 2014.
In October 2024, the sponsors of the project proposed the construction of a new, USD 2bn, 923-km gas pipeline from Humay to Arequipa in exchange for a 10-year extension to the contract with Peru’s Ministry of Energy and Mines. The expansion would carry Camisea gas to the southern regions of the country through what has been called “TGP Extensión Sur”.
In November of last year, Fitch Ratings affirmed TGP’s USD 850m unsecured notes due in 2028 at ‘BBB+’.
“Fitch’s base case assumes TGP will strengthen its capital structure by paying down debt starting in 2024, as its USD 850m bond begins to amortize in five equal annual installments in anticipation of the concession expiration in 2033. Fitch expects leverage to continue to decline over the medium term,” the agency said at the time.