Italian energy major Eni SpA signed a temporary exclusivity agreement with KKR & Co to sell a stake in its Enilive unit, potentially worth more than €3 billion (US$3.3 billion).

Discussions on the sale of a 20% to 25% stake in Enilive are based on a valuation for the biorefining unit of €11.5 billion to €12.5 billion, Eni said in a statement on Tuesday. Both companies are committed to negotiating a deal, it said.

Eni shares rose as much as 1.4% in Milan trading, giving the company a market valuation of almost €47 billion.

The potential sale is part of Eni’s reorganisation to help fund a transition to gas and renewable energy. chief executive officer Claudio Descalzi is pursuing a so-called satellite model for the company, which entails listing divisions or partnering with external investors to develop them.

The valuation range for Enilive - which comprises biorefining and biomethane assets as well as mobility solutions - is above market expectations, Biraj Borkhataria, an analyst at RBC Capital Markets, wrote in a note.

“The price tag is likely to surprise investors positively particularly as public market sentiment towards biofuels has been particularly negative recently,” he said.

Given strong investor interest, Eni said it could sell a further 10% of Enilive.

Eni’s new strategy started with the disposal of a minority stake in Eni’s green unit Plenitude to Energy Infrastructure Partners AG in 2023. The company also plans to split off its carbon-capture division and its biochemical subsidiary Novamont by 2027.

The sale of stakes in various units would also allow Eni to follow in the steps of the oil supermajors in returning more cash to shareholders as they’ve sought to resuscitate stock valuations.

  - Bloomberg