Blackstone, Canadian pension funds invest $3.1-billion for LNG Canada stake

Blackstone Inc. BX-N and four major Canadian pension funds are paying US$3.1-billion to buy a minority stake in a Mitsubishi Corp. subsidiary that owns a share of LNG Canada’s liquefaction business.

The group is acquiring a 49.9-per-cent non-controlling interest in the subsidiary owned by Japanese-based Mitsubishi, which will stay the controlling partner.

Blackstone is leading the investor group that includes Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System, Investment Management Corp. of Ontario and the Public Sector Pension Investment Board.

LNG Canada operates the country’s first natural-gas export terminal, opened in June, 2025. Mitsubishi owns a 15-per-cent stake in LNG Canada and will continue its agreement to offtake 2.1 million tonnes of liquefied natural gas annually.

For nearly a year, Mitsubishi and LNG Canada’s largest shareholder, Shell PLC SHEL-N, have been considering altering their stakes in the $18-billion LNG export terminal in Kitimat, B.C., to raise funds for expansion plans.

Mitsubishi hired Royal Bank of Canada’s capital markets arm to pursue a deal and both shareholders were reportedly fielding bids as early as this summer from U.S.-based asset managers such as Blackstone and Apollo Global Management Inc.

An expansion plan to build a second phase that will double LNG Canada’s annual output from 14 million tonnes to 28 million was confirmed in late September, which would make it one of the largest LNG facilities in the world.

The stake in Mitsubishi’s subsidiary that Blackstone and the pension funds are acquiring is valued at US$1.6-billion, and the total $3.1-billion investment includes the costs of planned capital expenditures for the phase 2 expansion project.

Mitsubishi said in a news release that the deal allows it to tap into the deep financial resources that Blackstone and the Canadian pension funds bring to the table “to advance the expansion project and further enhance the value of the business.”

Blackstone and CPPIB are investing through funds managed by their credit investment vehicles.

“This announcement builds on our deep conviction in Canada, our partnership with the country’s leading institutional investors and our ability to provide large corporates with flexible solutions to unlock value from their most critical assets,” said Zachary Rubenstein, managing director for Blackstone Credit & Insurance, in a statement.

Geoff Souter, CPPIB’s head of real assets credit, said in a statement that LNG Canada is “a high-quality, globally strategic asset with strong long-term fundamentals and attractive return potential for the CPP Fund.”

RBC advised Mitsubishi on the transaction, while Goldman Sachs and Scotiabank advised Blackstone. Kirkland & Ellis and Stikeman Elliott served as legal counsel to Blackstone.