Enbridge forms C$2.7B joint venture with KKR and Apollo

Enbridge Inc. (TSX: ENB, NYSE: ENB) has agreed to form a joint venture with KKR (NYSE: KKR) and Apollo to fund two expansion programs on its Westcoast natural gas pipeline system in British Columbia.

Under the agreement, KKR and Apollo will invest approximately C$2.7 billion to fund the Aspen Point and Sunrise Expansion Programs, with C$0.7 billion paid in cash to Enbridge at closing. In exchange, the investors will receive a cumulative 29% indirect interest in the aggregate Westcoast system once the Sunrise Expansion Program enters service.

The Aspen Point Expansion Program is expected to enter service in 2026, with the Sunrise Expansion Program following in late 2028. Both expansions have regulatory approval and are backed by long-term take-or-pay contracts. The Westcoast system currently moves up to 3.6 billion cubic feet of natural gas per day, a figure expected to rise to 3.9 bcf/d after the Sunrise program is complete.

Enbridge will retain majority ownership and operational control of the Westcoast system. The company also holds an option to repurchase the investors' interest at any time between the seventh and fourteenth year following close.

Pat Murray, Enbridge's Executive Vice President and Chief Financial Officer, said the transaction "allows us to efficiently recycle capital, strengthen our balance sheet, and maintain financial flexibility." He noted the company's capital recycling program has generated C$19 billion in proceeds since 2014.

Enbridge said the transaction is not material to its 2026 financial guidance or medium-term financial outlook. The deal remains subject to customary closing conditions.

Morgan Stanley Canada Limited served as lead financial advisor to Enbridge, with TD Securities as co-advisor. CIBC Capital Markets advised KKR, and Scotiabank advised the Apollo funds.

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