Insurance capital replaces bank debt in $16bn Kuwait pipeline deal

Blackstone, Brookfield and KKR funded the debt on their $16bn Kuwait pipeline partnership with insurance capital rather than the bank package their advisers had assembled, Bloomberg reported on 17 August. The consortium signed the transaction with Kuwait Oil Co on 25 July, taking a 49% stake in a new Kuwaiti joint venture in equal thirds, with the state company holding the remaining 51%. It is structured as a lease and leaseback over 13 pipelines running about 320km across the domestic and export network, for a term of 20.5 years. Kuwait Oil keeps full ownership and operational control, receives exclusive use and maintenance rights, and takes $7.85bn on closing against a volume-based tariff.

HSBC and JPMorgan had assembled a multibillion-dollar conventional facility that the buyers then declined to draw. Bloomberg's account of the financing rests on people familiar with the matter; the issuer's announcement makes no reference to how the deal was funded, and none of the four parties has described the structure publicly.

Insurers already lend against infrastructure in the United States and Europe. Displacing a syndicated bank facility on this scale in the Gulf is new, where buyers have more often taken bridge financing from banks and refinanced it in the bond market.