Sempra unlocks US$4.56 billion as infrastructure partnership sale closes

Infrastructure stake sale delivers immediate cash and deferred consideration

Sempra (NYSE:SRE) has completed the sale of a 45% equity interest in Sempra Infrastructure Partners to entities associated with KKR and Canada Pension Plan Investment Board, turning a long-planned transaction into a material balance-sheet event. Sempra received US$4.56 billion in cash at closing, subject to post-closing adjustments, with the remainder of the purchase price payable through instruments carrying substantial interest.

The deferred package comprises US$4.14 billion accruing interest at 7.5% a year, compounded quarterly, until maturity on December 31, 2027. A further US$1.20 billion will accrue interest at 8.5% before January 1, 2031 and 10% thereafter until February 11, 2034. If held to maturity, those instruments would total about US$4.51 billion and US$2.31 billion respectively, including principal and interest. The amount could be lower if prepaid, and the first package is supported by equity commitment letters from KKR Partners investors.

Sale gain is large, but transaction costs dilute the headline

Sempra expects to record a preliminary gain on sale of between US$2.80 billion and US$3.30 billion, or US$2.00 billion to US$2.40 billion after tax. It also expects to recognise US$450 million to US$550 million in additional transaction costs, equivalent to US$325 million to US$400 million after tax. Both estimates remain subject to post-closing adjustments, so the eventual accounting result may differ materially.

The closing follows the 45% infrastructure stake sale

that Sempra had identified as nearing completion in its latest quarterly coverage, where the company also reported US$917 million in adjusted third-quarter earnings. The filing does not provide a final pro forma effect on revenue, earnings, debt or cash flow, leaving the next periodic report to show how the transaction changes the group’s reported profile.

Sempra loses control while retaining a minority interest

KKR Partners now owns 65% of Sempra Infrastructure Partners, while Sempra retains 25% and ADIA holds 10%. Because Sempra no longer controls the partnership financially, it has deconsolidated the business from November 12 and will account for its remaining interest using the equity method within the Sempra Infrastructure segment. That change is likely to matter as much as the gain itself for readers comparing future revenue, earnings and balance-sheet figures with prior periods.

CFO transition takes effect after transaction closes

Justin C. Bird will become Sempra’s executive vice president and chief financial officer on November 13, taking over from Karen L. Sedgwick. Sedgwick has been appointed chief executive of Southern California Gas Company, another Sempra subsidiary, with the same effective date. The filing presents the leadership change as timed to the transaction’s completion, placing Bird at the finance helm as Sempra begins reporting the partnership as an equity-method investment rather than a consolidated operation.