Eni and KKR negotiate over purchase of shares in biofuel subsidiary

The Italian energy company Eni is in advanced negotiations with the U.S. private equity group KKR about selling a stake in its biofuels unit Enilive. This transaction could value the business, including debt, at up to 12.5 billion euros. KKR is interested in acquiring a 20 to 25 percent stake, corresponding to a value of up to 3.1 billion euros, exceeding analysts' expectations. The capital aims to help Eni finance its diversification strategy from fossil fuels to renewable energies. The company has signed a temporary exclusivity agreement with KKR and, due to strong interest from financial institutions, may additionally sell a further 10 percent. Contrary to a generally skeptical investor environment towards green energy, the biofuels sector is showing positive developments here. Under the leadership of CEO Claudio Descalzi, Eni had already sold an 8 percent stake in its subsidiary Plenitude for 588 million euros to Energy Infrastructure Partners this year, attributing Plenitude a corporate value of over 10 billion euros. Despite a decline in investor interest in biofuels due to weak financial returns and lack of government support, KKR demonstrates a counter signal with the planned investment in Enilive. Biofuels are considered more sustainable compared to conventional fuels. A comparable situation was seen at Shell, which recently halted the construction of a plant in Rotterdam that was supposed to convert waste into jet fuel and biodiesel, and planned write-downs of up to 1 billion U.S. dollars. The market value of Enilive positively surprised many market observers, especially since the sentiment towards biofuels was rather negative in view of lower margins and political uncertainties, said analyst Biraj Borkhataria of RBC Capital. Eni's shares were stable at 14.06 euros in the late afternoon, despite a 10 percent decline since the beginning of the year. Eni continues to pursue the goal of generating around 8 billion euros from the sale of assets between 2024 and 2027.