Sempra Sells Stake To Fund US Utility Growth
News Summary
Sempra (SRE) announced a $10 billion deal to sell a 45% stake in Sempra Infrastructure Partners to affiliates of KKR & Co (KKR) and Canada Pension Plan Investment Board. The transaction, expected to close in Q2 or Q3 2026, aims to strengthen the company’s balance sheet and increase its focus on regulated utilities in the U.S. The agreement values Sempra Infrastructure Partners at $22.2 billion in equity and $31.7 billion in enterprise value. Post-completion, KKR and its partners will hold 65% of the business, Sempra will retain 25%, and the Abu Dhabi Investment Authority 10%. Sempra Chairman and CEO Jeffrey W. Martin stated the deal advances the company’s capital recycling program and transition to a leading U.S. utility growth business. Concurrently, Sempra Infrastructure Partners made a final investment decision to proceed with Phase 2 of the Port Arthur LNG project, a $14 billion expansion targeted for operations in 2030 and 2031. This project secured $7 billion in equity financing led by Blackstone Inc.’s (BX) Blackstone Credit & Insurance. Sempra updated its 2025 GAAP earnings guidance downwards but reaffirmed its adjusted EPS guidance for 2025 and 2026, projecting 7% to 9% annual earnings growth through 2029.
Background
Sempra is a U.S.-based energy infrastructure company with primary operations in electric power, natural gas transmission and distribution, and liquefied natural gas (LNG) export facilities. The company has a long-standing commitment to optimizing its asset portfolio to adapt to evolving energy markets and regulatory landscapes. In recent years, Sempra has been pursuing a "capital recycling" strategy, divesting stakes in non-core or mature assets to fund investments in higher-growth businesses, particularly within the regulated U.S. utility sector. Concurrently, global demand for energy, especially LNG, has continued to fuel investment in large-scale energy infrastructure projects.
In-Depth AI Insights
What are the true strategic intentions behind Sempra's simultaneous divestment of an infrastructure stake and expansion of a major LNG project? - Sempra's move is not a simple divestiture but a sophisticated capital optimization strategy. Selling a majority stake in Sempra Infrastructure Partners allows them to recycle significant capital to strengthen their balance sheet and invest in their core U.S. regulated utility businesses. This suggests Sempra is prioritizing more stable, predictable revenue streams, potentially to navigate rising interest rates and market volatility. - Despite selling a majority stake, Sempra Infrastructure Partners retains key control and the bulk of the growth potential for the Port Arthur LNG Phase 2 project. By bringing in powerful financial partners like KKR, CPPIB, Blackstone, etc., Sempra can de-risk the massive capital expenditure of the LNG project and leverage these institutions' financial strength to accelerate construction, while maintaining strategic influence over critical energy export assets. What are the deeper implications of Sempra's pivot towards regulated U.S. utility growth, especially under the re-elected Trump administration? - The Trump administration has consistently advocated for deregulation in the energy sector and promoted