New Fortress Energy Inc. announced Tuesday that it agreed to sell 11 liquefied natural gas-infrastructure vessels to a newly formed joint venture between New Fortress and Apollo in a transaction valued about $2 billion.
The JV will be owned 80 percent by Apollo Funds and 20 percent by NFE.
Closing is expected in the third quarter if regulators and third parties approve. Transaction proceeds, which could amount to $1.1 billion, are expected to be used to fund NFE’s so-called Fast LNG projects and for ongoing downstream infrastructure and general corporate purposes.
Vinson & Elkins advised funds managed by Apollo led by private equity and M&A partner Jim Fox of New York but also maritime partner John Michael in Houston as well as partners Patrick Whelan, Dan Komarek and Brett Santoli in New York. They had assistance from partner Chris Strong and senior associate Steven Wilson in London, associate Jimmy Chalk in Houston and Austin and tax partners Jason McIntosh in Houston and Ron Nardini in New York.
The deal will create a global marine-infrastructure platform underpinned by long-term contracts. NFE has been involved with LNG downstream operations and development and Apollo has maritime experience.
NFE said the platform provides infrastructure for the delivery, storage and regasification of LNG to power countries around the world, which can reduce their reliance on oil and coal to lower carbon emissions while helping them save money. The platform also serves utilities and energy companies worldwide under third-party charters.
The 11-vessel portfolio consists of six floating storage and regasification units, two LNG carriers and three floating storage units.
As part of the deal, NFE has agreed to charter 10 of the 11 of the vessels from the platform for up to 20 years beginning either at the transaction’s close or expiration of the vessels’ existing third-party charter agreements. The JV will also seek growth opportunities in support of NFE and third parties to support the energy transition and bolster energy security globally.
Wes Edens, chairman and CEO of NFE, said in a statement that the company and Apollo are creating a leading LNG marine-infrastructure platform to help accelerate the energy transition while freeing NFE’s capital.
Apollo partner Brad Fierstein, who is leading the investment, said energy transition and energy reliability are priorities and core to Apollo’s sustainable investing.
“This is a high-quality portfolio that increases energy security around the world, accelerates decarbonization efforts and facilitates LNG use, which is cleaner and more affordable than diesel,” he said.