KKR, Apollo to invest C$2.7 billion in Enbridge's Westcoast pipeline expansionAnalysis

Enbridge has agreed to sell KKR and Apollo an indirect, cumulative 29% interest in its Westcoast natural gas pipeline system for approximately C$2.7 billion. The joint venture, led by capital accounts advised by KKR in collaboration with funds and affiliates managed by Apollo, will fund two previously sanctioned expansion projects on the Westcoast system in British Columbia: the Aspen Point Expansion Program and the Sunrise Expansion Program.

Deal terms

KKR and Apollo will invest about C$2.7 billion to fund the Expansions, including C$0.7 billion in cash paid to Enbridge at closing. In return, the investors receive their 29% interest in the aggregate Westcoast system once the Sunrise Expansion Program enters service, and they begin collecting distributions as each project comes online. Enbridge keeps majority ownership and operational control of the Westcoast system, including responsibility for building the Expansions, and holds an option to buy back the investors' interest in the joint venture at any point between the seventh and fourteenth year after closing. The transaction still needs to clear customary closing conditions.

Two expansion projects

Both the Aspen Point and Sunrise programs already have regulatory approval and are backed by long-term take-or-pay contracts, which require shippers to pay for pipeline capacity whether or not they use it. Aspen Point is expected to enter service in 2026, and Sunrise is expected to follow in late 2028. Apollo's Jamshid Ehsani called Enbridge "one of the largest and most reputable energy infrastructure companies in North America" and said the Westcoast system is critical to meeting growing natural gas demand in British Columbia, the U.S. Pacific Northwest and international LNG markets.

Executive comment

Enbridge's Executive Vice President and Chief Financial Officer, Pat Murray, said the deal lets the company "efficiently recycle capital, strengthen our balance sheet, and maintain financial flexibility." He added that Enbridge's broader capital recycling program has generated C$19 billion in proceeds since 2014. KKR's Paul Workman said the firm is "investing alongside leading operators in key infrastructure with stable, long-term cash flows," and that the Westcoast system serves customers across Western Canada and North America.

Advisors and guidance

Morgan Stanley Canada Limited acted as lead advisor and TD Securities as co-advisor to Enbridge, with Sullivan & Cromwell LLP and McCarthy Tetrault LLP as legal advisors. CIBC Capital Markets advised KKR, with Kirkland & Ellis LLP and Bennett Jones LLP as legal counsel. Scotiabank advised the Apollo funds, with Milbank LLP as legal counsel. Enbridge said the transaction is not material to its 2026 financial guidance or medium-term financial outlook.