China's ENN Group Picks Up Stake in Australia's Santos

China’s ENN Group is set to buy Hony Capital’s 11.7 percent shareholding in Australian oil and gas company Santos.

ENN Ecological Holdings Co., a subsidiary of the ENN Group, on Thursday announced it will acquire Hony Capital’s share in Santos for $750 million to become the largest shareholder in the Australian energy company.

“Santos notes the ENN Group’s announcement in relation to the proposed acquisition of Hony Capital’s 11.7 percent shareholding in Santos, subject to certain conditions, including the ENN Group’s shareholder approval.  As part of the transaction Hony Capital will become a strategic investor in the ENN Group through a private placement,” Santos said in a statement.

The ENN Group is a large private distributor of gas into the Chinese market and a known industry player in Australia. ENN is also building China’s first private LNG receiving terminal in Zhoushan, Zhejiang Province, to receive imported natural gas. It will have an annual capacity of 3 million tons when Phase 1 is completed in 2018, with scope for further expansion.

“The proposed acquisition is an exciting move for ENN. This introduction to the Upstream sector takes us a step forward in our aim to generate value across the entire natural gas value chain, and allows us to learn and build experience,” Wang Yusuo, Chairman of the ENN Group, said.

Following a request from Hony Capital, Santos has provided consent to the transfer to the ENN Group under the terms of the subscription agreement entered into at the time of Santos’ capital raising in 2015.

As part of the deal, Hony Capital, a private equity firm, will become second largest shareholder in ENN’s A-share listed company through a private placement of new shares, equivalent to $380 million.