Enbridge to sell stakes in seven pipelines to Indigenous groups for $1.12 billion

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Calgary-based Enbridge Inc. has signed an agreement with 23 First Nation and Metis communities to sell an 11.57 per cent interest in seven pipelines located in the Athabasca region of northern Alberta for $1.12 billion.

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The deal is the largest energy-related Indigenous economic partnership transaction in North America to date, the pipeline company said Wednesday.

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A newly created entity called the Athabasca Indigenous Investments (AII), will be responsible for the investment.

“The deal is significant because it gives all 23 Indigenous communities that are directly impacted by these assets a direct stake,” said Justin Bourque, AII president. “It positioned the communities for long-term impact now and for future generations.”

He said the deal will be funded through a mix of debt and equity, with the debt financing coming from the Alberta Indigenous Opportunities Corporation, a group that finances Indigenous communities seeking commercial partnerships.

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Greg Desjarlais, chief of Frog Lake First Nation, described the deal as “historic” for communities in the region. “In addition to an opportunity to generate wealth for our people, this investment supports economic sovereignty for our communities,” he said.

The agreement is part of Enbridge’s Indigenous reconciliation action plan which aims to boost its relationships with native communities and employees. It also fulfils the company’s goal to “recycle capital at attractive valuations,” it said.

“We believe this partnership exemplifies how Enbridge and indigenous communities can work together, not only in stewarding the environment, but also in owning and operating critical energy infrastructure,” Al Monaco, the company’s chief executive, said in the press release.

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Bank of Nova Scotia analyst Robert Hope in a note Wednesday said he expects more deals of “this nature” from Enbridge in the future. He described the agreement as a “slight positive” for the pipeline company.

“The transaction does not materially move our per share estimates. We view this agreement as an example of Enbridge’s efforts to support and deepen its relationships with Indigenous communities in Canada.”

The deal is expected to close within the next month.

Enbridge has announced the agreement at a time when it is looking to resolve environmental issues raised by the Bad River Band of the Lake Superior Chippewa in northern Wisconsin connected to its Line 5 pipeline.

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