Post-transaction, the two parties will hold a stake of 37.5% each in the gas pipeline system in the US
Kinder Morgan (KMI) and Brookfield Infrastructure Partners have agreed to jointly sell a 25% stake in Natural Gas Pipeline Company of America (NGPL), the holding company of the NGPL pipeline system, to a fund controlled by ArcLight Capital Partners for $830m.
The transaction values 100% of the natural gas pipeline system at around $5.2bn.
NGPL, which comprises nearly 14,645km of pipeline, is claimed to be the largest transporter of natural gas into the Chicago-area market.
The interstate pipeline system procures gas from the Texas Permian Basin and Gulf of Mexico.
It also transports natural gas to the liquefied natural gas (LNG) export facilities and other markets across the Texas and Louisiana Gulf Coast.
The NGPL system has over one million compression horsepower and a working natural gas storage of 288 billion cubic feet (Bcf).
For its customers, NGPL gives access to all major natural gas supply basins directly and through its multiple interconnects with intrastate and interstate pipeline systems.
The proceeds from the sale will be equally shared between Kinder Morgan and Brookfield Infrastructure Partners.
After the completion of the sale, the two parties will each have a stake of 37.5% in NGPL. Kinder Morgan will continue to be the operator of the pipeline system.
Kinder Morgan natural gas pipelines president Tom Martin said: “Kinder Morgan and Brookfield Infrastructure are pleased to welcome ArcLight into the NGPL joint venture.
“We believe this investment shows the value of natural gas infrastructure both today and in the decades to come.”
For the deal, NGPL had engaged RBC Capital Markets as its exclusive financial adviser, while King and Spalding served as its legal adviser.
On the other hand, Barclays was the exclusive financial adviser to ArcLight Capital Partners, while the legal adviser was Latham & Watkins.
Barclays has also given a committed debt financing to ArcLight Capital Partners to support the acquisition.
The deal is anticipated to be completed in the first quarter of 2021.