(New throughout, adds details and background)
By Sabrina Valle and Rithika Krishna
RIO DE JANEIRO, Jan 13 (Reuters) - U.S.-based New Fortress
Energy Inc said on Wednesday it would buy natural gas
company Hygo Energy Transition Ltd for $2.18 billion to
expand its presence in Brazil, a frontier for growth in the
burgeoning liquefied natural gas market.
New Fortress, an energy infrastructure company, is among the
private industry players setting their sights on Brazil, where
demand for super-cooled LNG is rising, though the market is
smaller than in India and China, where power generators are
shifting from dirtier coal to natural gas.
With Brazil opening its natural gas industry to private
investors, other companies including oil major BP PLC and
U.S.-based EIG Global Partners also plan multibillion-dollar
investments in the country.
New Fortress, a growing competitor in the LNG industry, has
a small gas liquefaction plant in Florida and sends LNG
throughout the Caribbean. In the last year, its market value has
soared by 286% to $10 billion, according to Refinitiv Eikon
data. It is building a larger LNG import terminal in Mexico.
The company will acquire all outstanding shares of Hygo for
31.4 million shares of NFE Class A common stock and $580 million
in cash.
Brazil's annual demand for LNG is expected to grow by more
than 80% in 2021, the world's fastest rate, although its
starting point is relatively low compared to big Asian
consumers, said Kristen Holmquist, forecasting specialist at
Poten & Partners.
Unlike those countries, most of Brazil's power comes from
hydroelectricity. This LNG supply is meant in part to replace
natural gas supply from a pipeline originating in Bolivia.
Hygo transports the super-chilled fuel and has become a key
player in the Brazilian natural gas industry as state-controlled
Petrobras sells assets, undoing what had been a near monopoly in
that market.
Hygo - a 50-50% joint venture between U.S. private equity
firm Stonepeak Infrastructure Partners and Golar LNG -
has recently invested in a number of LNG projects in Brazil for
power generation. It is also competing to operate a
highly-sought-after LNG import terminal being leased by
Petrobras.
"There is strong growth in Brazil for power-backed
projects," Holmquist said in a webinar on Wednesday.
Hygo had told Reuters in 2020 it had plans to eventually use
LNG as a substitute for diesel in trucks.
The transaction has a $3.1 billion enterprise value and a
$2.18 billion equity value, according to the statement.
The Hygo acquisition comes four months after the company's
debut trading in New York was suspended at the last minute after
Brazilian federal prosecutors said the company's then-chief
executive was named in the early stages of a corruption
investigation, for activities at a previous employer.
Then-CEO Eduardo Antonello has since left the company. He
has not been charged.
New Fortress also agreed to buy Hygo's controlling company
Golar LNG Partners LP for about $251 million in common
equity value and a $1.9 billion enterprise value.
Golar LNG Ltd shares were up 15% in U.S. trading, while New
Fortress Energy shares rose 10%.
(Reporting by Sabrina Valle and Rithika Krishna; Editing by
Maju Samuel, Krishna Chandra Eluri, Steve Orlofsky and David
Gegorio)
BP (BP.)
