Eni in exclusive talks for potential €3b Enilive stake sale to KKR

Italian energy giant Eni SpA signed a temporary exclusivity agreement with KKR & Co. to sell a stake in its biofuels unit, Enilive, potentially worth more than €3 billion ($3.3 billion).

The potential deal, valued between €11.5 billion and €12.5 billion ($3.3 billion), could see KKR acquire between 20 per cent and 25 per cent of Enilive, Eni said in a statement on Tuesday.

This move aligns with Eni’s broader strategy to transition towards gas and renewable energy. CEO Claudio Descalzi envisions a satellite model where separate divisions are listed or partnered with external investors for faster growth.

The proposed valuation for Enilive, which comprises biorefineries, biomethane assets, and mobility solutions, has surprised analysts. Biraj Borkhataria of RBC Capital Markets highlights in a note the positive surprise for investors, especially considering recent market negativity towards biofuels.

“The price tag is likely to surprise investors positively particularly as public market sentiment towards biofuels has been particularly negative recently,” Borkhataria said.

Eni’s confidence in the deal is bolstered by strong investor interest. The company is open to selling an additional 10 per cent stake in Enilive if negotiations progress favourably.

This potential sale follows Eni’s 2023 disposal of a minority stake in its green unit Plenitude. The company plans to further streamline its operations by potentially splitting off its carbon-capture division and Novamont, its biochemical subsidiary, by 2027.

The strategy mirrors that of other oil majors who are divesting non-core assets and returning cash to shareholders to boost stock valuations.

Attribution: Bloomberg and Eni statement