Brookfield to acquire Ambani gas pipeline.

Canadian investor Brookfield is set to buy the lossmaking East West Pipeline Ltd. (EWPL), earlier known as Reliance Gas Transportation Infrastructure Ltd., for an enterprise valuation of Rs. 14,000 crore ($2 billion). 

Brookfield is uniquely sponsoring an infrastructure investment trust (InvIT) called India Infrastructure Trust as the acquisition vehicle to take over the 1,400 km common carrier pipeline from Kakinada on the east coast to Bharuch in Gujarat. 

The Competition Commission of India (CCI) approved the transaction last week. Brookfield has also filed an application with the Securities and Exchange Board of India (Sebi) for registering the InvIT, approval for which is expected this month, following which a formal joint announcement will be made, said multiple sources aware of the matter. 

The pipeline housed under EWPL is being transferred to an entity called Pipeline Infrastructure Pvt Ltd. (PIPL), a wholly owned subsidiary of Reliance Industries Holding Pvt. Ltd. (RIHPL). That’s a holding arm of Mukesh Ambani and family, the promoters of Reliance Industries Ltd (RIL). 

EWPL has already filed an application with the National Company Law Tribunal for the asset transfer. 

The $2 billion will be evenly split between equity and debt and Brookfield is said to be currently in negotiations with Indian lenders such as ICICI Bank  for financing. 

Brookfield declined to comment. There was no response from Reliance to queries sent recently. 

JM Financial is advisor to the transaction. As part of the contract with Brookfield, Ambani is also said to be negotiating a clause that would allow buying back the asset after 20-25 years. But those terms are still getting finalised. 

“It’s a great way of monetising an asset. Brookfield and the four other small sponsors of the trust will get cashflows from the pipeline, which will give them their desired yields,” said a Reliance executive on condition of anonymity. “InvITs are tax-efficient vehicles and give an optionality in the future to add more assets.” 

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