Macquarie Asset Management has withdrawn from the competitive process to buy a stake in Kuwait's oil pipeline network, a potential transaction valued at up to $7 billion, two people familiar with the matter said. The Australian infrastructure investor informed Kuwait Petroleum Corporation (KPC) on Friday that it was stepping aside, citing the ongoing conflict involving Iran and an uncertain outlook, one of the people said.
The decision makes Macquarie one of the first publicly known investors to walk away from a Gulf infrastructure deal in the wake of the conflict. Dealmakers attempting to advance the sale say the episode highlights how recent hostilities have dampened appetite for assets exposed to the narrow export routes that many Gulf producers rely on.
Sources involved in the process said the conflict has left millions of barrels of crude effectively stranded after Iran's actions closed the Strait of Hormuz, the key maritime corridor. Kuwait, they noted, has no alternative to the narrow waterway between Iran and Oman for exports - a channel that normally carries one fifth of the world's oil supply.
Macquarie's head of infrastructure for the EMEA region, Martin Bradley, provided a written statement emphasizing the firm's ongoing commitment to the region. "Macquarie Asset Management has been and will continue to be committed to the region and is actively progressing discussions on long‑term investment opportunities across the region, including in Kuwait," he said in an emailed comment, without addressing the specific pipeline sale.
Sale process moves forward amid growing uncertainty
Despite Macquarie's exit, companies advising on the disposal of the pipeline stake say they are pressing ahead, though with increasing caution. More than half a dozen dealmakers involved in related work said that the environment is creating uncertainty over valuations and execution risks.
One source involved in the sale said KPC launched the process only hours before Iranian missiles first struck cities in the Gulf late last month, increasing the unpredictability surrounding buyer interest and potential deal timelines. KPC has since declared force majeure and reduced production, yet bankers working on the transaction have continued to pursue investor interest, three people with knowledge of the situation said.
Advisers have circulated information to prospective bidders and are seeking non-binding offers by April 7, according to the sources. Names previously reported as interested parties include BlackRock and KKR; it was not possible to determine whether those firms remained engaged in the bidding.
Questions persist about the pipeline network's future throughput and the proximity of parts of the system to Iranian military assets, factors that advisers say are complicating investor assessments. Requests for comment to KPC and BlackRock did not receive immediate responses, and KKR declined to comment.
Other Gulf infrastructure transactions continue, but with caution
Market participants said other Middle East asset sales are continuing even as buyers and sellers adapt to the heightened geopolitical risk. Saudi Arabia's King Abdullah Financial District (KAFD) is marketing district cooling assets for more than $500 million, with non-binding bids submitted in the first week of March, two people familiar with those sales said. KAFD was not immediately available for comment.
Saudi infrastructure group SISCO Holding is also advancing the sale of a water asset portfolio valued at roughly 1 billion riyals, or about $266 million, several sources said. SISCO did not provide an immediate comment when contacted.
One industry source highlighted the difficulty for sellers in maintaining tight timetables for disposals while investors assess deals amid airstrikes and broad economic uncertainty. Some buyers are re-examining material adverse change provisions in transaction documents - contractual safeguards that can permit parties to withdraw if circumstances deteriorate - while lenders could demand higher borrowing costs for exposure to regional corporates.
Anshul Gupta, partner and head of deal advisory for the Middle East at KPMG, described a more cautious tone across transactions. "We are seeing a degree of caution, particularly around transactions that were already underway, with some clients taking a little more time to progress to completion," he said, while adding that client discussions remain active. "We also expect capital to remain available, although pricing is likely to reflect broader market conditions in the near term."
Private equity participants are not universally pausing activity. Imad Ghandour, co-founder and managing director of CedarBridge Capital Partners, said his firm is moving forward with a couple of deals despite the current events. "We strongly believe that GCC macro trends will persist," he said, referring to the six countries of the Gulf Cooperation Council.
Context on investor outreach and deadlines
Advisers working on the Kuwaiti pipeline sale have sent data and bid materials to potential investors and are asking for non-binding proposals by the April 7 deadline set in the process. Market participants say that, while interest remains among some large asset managers and buyout firms, final investment decisions are being weighed against an uncertain operational outlook for exports and potential security risks tied to nearby military assets.
Separately, buyers and sellers across the region are reassessing transaction terms - in particular clauses that allow parties to exit if material adverse changes occur - and financing dynamics, as lenders price in geopolitical exposures and economic uncertainty when extending credit.
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As the sale for the Kuwaiti pipeline stake moves forward without one high-profile bidder, market participants say the transaction will be a barometer of investor sentiment toward Gulf energy infrastructure while sellers and advisers adapt timetables and terms to reflect the heightened regional risk environment.