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Enagas sells its stake in Tallgrass Energy for 1 billion euros

Spanish gas group Enagas sells its 30.2% stake in Tallgrass Energy to finance its green hydrogen projects, reinforcing its plans to invest in renewable hydrogen infrastructure.

energynews
Le 11 July 2024

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Enagas, Spain’s gas network operator, has announced the sale of its 30.2% stake in Tallgrass Energy to US investment firm Blackstone for $1.1 billion (€1.018 billion). This transaction is part of a strategy to finance the development of green hydrogen projects, essential to the company’s energy transition.

Divestment strategy and focus on hydrogen

Enagas has decided to sell its US assets to refocus on Europe and strengthen its investments in renewable hydrogen infrastructure. The sale to Blackstone, already a shareholder in Tallgrass Energy, is expected to be finalized by the end of July, resulting in a book loss of 360 million euros for Enagas in 2024. However, the impact on earnings could become positive from 2025 onwards, according to financial analyst Fernando Garcia of RBC.

Financial implications and long-term outlook

Enagas had originally acquired its stake in Tallgrass for $1.64 billion in 2019, in partnership with Blackstone and Singapore sovereign wealth fund GIC. The current divestment, while generating an immediate loss, enables Enagas to focus on strategic projects such as the H2Med trans-European corridor. This initiative is supported by the Spanish government’s plans to develop green hydrogen production.

Increased investment in hydrogen

The group is planning a net investment of around 3.2 billion euros between now and 2030 to develop its hydrogen transport network in Spain. This transition is crucial for Enagas, whose regulated hydrogen assets should reach a value of 3 billion euros by the end of the decade, surpassing natural gas assets valued at around 2 billion euros.

Dividend cuts and stock market impact

To finance these ambitious investments, Enagas has also announced a reduction in its dividend for the next three years. Despite this news, Enagas shares were up 3.9% in early trading on Wednesday, reflecting investor confidence in the company’s new strategic direction.
Thus, the sale of Tallgrass Energy to Blackstone is part of a broader strategy of divestment and reorientation towards renewable hydrogen projects, positioning Enagas as a key player in Europe’s energy transition.

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