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With the right partner by your side, anything seems possible. This is particularly true when it comes to midstream companies and the private-equity providers that financially back them.
Midstream capex is expected to average $44 billion per year through 2035, according to a recent Interstate Natural Gas Association of America study. That’s a lot of money. Private-equity firms are helping fuel new projects by strategically investing in promising midstream companies throughout the country.
Money invested—whether by world-renowned firms or small niche organizations—is playing an indispensable role in midstream buildout.
Alinda Capital Partners LLC
As one of the world’s largest infrastructure firms, Alinda invests in businesses across the globe. It has partnered with companies throughout Canada, Europe and more than 30 states.
In 2018, Alinda acquired minority interest in the Maurepas Pipeline from Tulsa, Okla.-based SemGroup Energy Partners LP. It paid $350 million for 49% interest in the pipeline, which serves refineries in Louisiana’s Gulf Coast region.
Alinda is also a majority stakeholder in the San Antonio-based pipeline firm Howard Midstream Energy Partners LLC. Other active midstream investments include Catalyst Midstream Partners LLC and Martin Midstream GP LLC. Overall, Alinda’s infrastructure businesses serve more than 100 million customers in more than 550 cities worldwide.
Apollo Global Management LLC
Just as its namesake, Apollo has developed a reputation for its knowledge and complexity. The firm is today considered one of the country’s largest alternative-investment managers. Its assets under management reached $280 billion during fourth-quarter 2018.
Its investments within the midstream world have been significant. Last August, Apollo provided Freestone Midstream Holdings LLC with a $200-million equity commitment to support the company’s business plan. The relationship allows Freestone to invest in water-sourcing and -handling assets for upstream oil and gas operators in Wyoming’s Powder River Basin.
Years earlier, funds managed by Apollo gave CSV Midstream Solutions Corp. a $500-million boost. The funds were marked in 2014 to pursue the construction and operation of midstream facilities in the Western Canadian Sedimentary Basin.
Blackstone Energy Partners LP
Blackstone’s energy private-equity business is one of the most active investors in the midstream sector. It has committed more than $5 billion of equity to investments spanning the midstream value chain.
Recent investments include Delaware Basin operator EagleClaw Midstream Ventures LLC, which acquired fellow Delaware operators Caprock Midstream Holdings and Pinnacle Midstream LLC.
In addition, it has partnered with Kinder Morgan Inc. on the Permian Highway natural gas pipeline, engaged in a partnership with Targa Resources Corp. on the Grand Prix NGL pipeline and has partnered with Energy Transfer Partners LP on the Rover gas pipeline serving the Marcellus and Utica plays.
Blackstone was also the original equity sponsor of Cheniere Energy Inc.’s liquefaction facility at Sabine Pass, La. It committed $2 billion of equity to the project.
Cadent Energy Partners LLC
Rye Brook, N.Y.
Throughout the past 34 years, principals at Cadent Energy Partners LLC have invested more than $1.1 billion. The natural resources-focused private-equity firm typically commits between $25- and $75 million per investment.
Unlike some of its competitors, Cadent invests across the energy spectrum, including upstream, midstream and downstream.
It is an active investor in Polyflow Holdings LLC, which manufactures and installs flexible composite pipelines for transporting hydrocarbons and rehabilitating steel pipelines. As well as offering expansion capital, Cadent finances private mergers and acquisitions, corporate divestitures and more.
The Carlyle Group
As one of the world’s largest investment firms, The Carlyle Group has $216 billion of assets under management. Its global portfolio includes 276 companies, including many in the energy sector.
In January, Carlyle invested in Crimson Midstream Holdings LLC, which provides oil transportation and storage. It operates more than 2,000 miles of pipeline in the U.S.
The partnership is to enhance Crimson’s support of shippers on its Gulf of Mexico, Louisiana and California pipeline systems. The investment is also to help grow its presence in those regions as demand for U.S. oil-export infrastructure grows.
Denham Capital Management LP
Denham Capital Management LP is a global energy and resources private-equity firm with offices in Boston, Houston, London and Perth, Australia. Its investment efforts span the oil and gas value chain, with an emphasis on North American upstream and midstream.
Its portfolio includes Spire HoldCo, focused on developing midstream infrastructure in Western Canada.
Meantime, in February, Denham parted with portfolio company WhiteWater Midstream LLC. The company was sold to funds managed by First Infrastructure Capital Advisors LLC for an undisclosed sum.
EIV Capital LLC
EIV Capital LLC is an energy private-equity firm with about $920 million in assets under management. It invests throughout the energy value chain, primarily partnering with growing midstream businesses.
The firm typically invests between $20- and $100 million per project, teaming with entrepreneurs in existing businesses or new platforms. However, it will provide up to $200 million. For instance, EIV partnered with H2O Midstream LLC in 2016 before oilfield water was as hot a topic as today, supporting the company’s growing footprint in the Permian Basin.
In early 2018, EIV extended its relationship with Fullstream Energy Holdings LLC, supporting its Marcellus greenfield pipeline and compression project. In the fall of last year, EIV backed Bayou Midstream LLC and continued its partnership with Woodland Midstream II LLC, following the successful exit of Woodland Midstream LLC.
EnCap Flatrock Midstream
EnCap Flatrock Midstream provides value-added growth capital to proven management teams focused on midstream infrastructure opportunities throughout North America. The firm was formed in 2008 in a partnership of EnCap Investments LP and Flatrock Energy Advisors LLC.
Based in San Antonio with additional offices in Oklahoma City and Houston, the firm manages investment commitments of nearly $9 billion from a broad group of institutional investors.
The firm forges strong partnerships with seasoned management teams, providing the capital, experience, expertise, operational support and contacts required to execute business plans.
EnCap Flatrock’s three co-founders—Dennis Jaggi, Bill Waldrip and Billy Lemmons—have worked together in the midstream sector for the majority of the past 30 years. Together with three additional managing partners, they lead a team of energy finance and technical professionals, including eight engineers.
An EnCap Flatrock count places it as the largest U.S. venture-capital firm focused exclusively on midstream. It is currently making commitments to new management teams from the $3.25-billion EFM Fund IV.
Recent transactions include Lotus Midstream LLC’s acquisition of the Centurion Pipeline System and Moda Midstream’s acquisition of the Ingleside Energy Center, an oil-export terminal on the Corpus Christi Ship Channel. Both purchases were from Occidental Petroleum Corp.; the combined purchase price was $2.6 billion.
Additional recent transactions include Nuevo Midstream Dos’ acquisition of Republic Midstream LLC and an initial $300-million commitment to newly formed Clear Creek Midstream LLC.
Energy Spectrum Capital
Founded in 1995, Energy Spectrum Capital was the first private-equity fund manager to focus on North America’s midstream energy sector. Since inception, the firm has raised seven midstream funds totaling more than $3.5 billion.
Its seventh fund, ESP VII, was closed in 2014, totaling nearly $1.23 billion. The firm is currently investing in lower-middle-market companies that acquire, develop and operate North American midstream energy assets.
As a cornerstone of its strategy, Energy Spectrum seeks to identify and partner with top-tier management teams. Seven of its current portfolio-company management teams are partnering with it for at least the second time. Furthermore, Energy Spectrum has partnered four times each with both Tulsa, Okla.-based Frontier Energy Services Midstream and Houston-based Laser Midstream Energy.
Laser Midstream seeks to dramatically increase efficiency in the North American oil and gas sector by acquiring, building and expanding gas, oil and water transportation and processing assets.
To date, Energy Spectrum’s ESP funds have invested in more than 55 portfolio companies.
First Reserve Corp.
Throughout the past 35 years, First Reserve has completed more than 650 transactions and raised more than $31 billion of aggregate capital. The global private-equity investment firm focuses exclusively on the energy industry and spans the upstream, midstream and downstream sectors. Its portfolio companies have operated on six continents.
First Reserve invests in targeted sectors through its private-equity program, which encompasses a diverse energy-related investment portfolio with a buy-and-build strategy driven by growth equity.
Its portfolio includes Plains All American Pipeline LP. The MLP owns an extensive network of midstream assets in key oil- and NGL-producing basins and transportation corridors, as well as major market hubs within the U.S. and Canada.
Five Point Energy LLC
Five Point Energy LLC specializes within the midstream and energy-infrastructure sectors. It has more than $2.5 billion of capital under management.
In February, Five Point announced the formation of joint venture San Mateo Midstream II LLC. San Mateo II, the second midstream partnership between Five Point and Matador Resources Co., will operate throughout the northern Delaware Basin.
Five Point’s other active investments include Twin Eagle Resource Management LLC, WaterBridge Resources LLC and EVX Midstream Partners LLC.
Founded in 2012, Five Point’s equity investments range from $10- to more than $500 million. The firm is led by energy-industry veterans who previously led successful midstream companies.
GCP Capital Partners LLC
GCP Capital Partners LLC was formed in 2009 as the successor to Greenhill Capital Partners LP, which was founded in 2000. Today, GCP manages North American private-equity funds that have invested about $1.3 billion in some 60 portfolio companies.
Eight have grown from acorns to mighty oaks, exiting at $1-billion enterprise values or higher. Its investments include Energy Transfer Equity LP, one of the biggest, publicly traded MLPs in the sector. It owns gas and processing assets, as well as a retail propane-distribution business. It also owns the 1,915-mile Dakota Access Pipeline that transports Bakken and Three Forks oil from the Williston Basin to storage and hubs in Illinois and Texas.
Haddington Ventures LLC
With a growing portfolio of midstream businesses, Haddington has invested more than $550 million to acquire, develop and optimize companies within the sector.
Its recent investments have included an assortment of traditional midstream infrastructure opportunities, including gathering, transportation, storage and processing. The company has also expanded its reach to include services such as nitrogen rejection, helium purification, compression and produced-water treatment.
With investments spanning the U.S., Haddington’s current portfolio encompasses seven midstream companies, including Eureka Resources LLC, which provides wastewater treatment and disposal in the Marcellus and Utica plays.
Some other active investments include Fairway Energy Partners LLC and Zechstein Energy Storage.
Hunt Energy Enterprises LLC
Hunt Energy Enterprises LLC’s strategy is to invest in companies with the power to disrupt the energy industry’s value chain.
It invests in new energy companies and in partnerships within conventional petroleum, alternative energy and clean power. Investing as a company that “never runs with the herd,” Hunt says it has become one of the largest independent energy companies by embracing values such as entrepreneurship, creativity and teamwork.
Kayne Anderson Capital Advisors LP
Kayne Anderson Capital Advisors LP subsidiary KA Fund Advisors LLC is a leading investor in both public and private midstream companies. It manages two publicly traded, closed-end funds: Kayne Anderson MLP Midstream Investment Co. (KYN) and Kanye Anderson Midstream Energy Fund Inc. (KMF).
As of February, KYN’s net assets were $2.1 billion. Its largest holdings are in Enterprise Products Partners LP, which is among North America’s largest midstream operators. KYN is also heavily invested in Energy Transfer Equity LP, ONEOK Inc. and Williams Cos. Inc.
KYN’s long-term investments are comprised of 68% midstream MLPs, 31% midstream operators and 1% shipping MLPs.
Macquarie Infrastructure Partners Inc.
New York City
Macquarie Infrastructure Partners Inc. (MIP) specializes in infrastructure investments throughout North America. It embarked in a significant private-equity commitment to the water midstream market in October when announcing it would invest up to $500 million in Lagoon Water Solutions.
Initial capital investment will help Lagoon fund upstream water-related infrastructure for producers in Oklahoma’s Anadarko Basin.
MIP operates within the Macquarie Infrastructure and Real Assets (MIRA) division of the Macquarie Group. In January, MIRA announced the closing of the MIP IV fund, having reached its $5-billion hard cap.
MIP IV is MIRA’s fifth North America-focused unlisted infrastructure fund. Its predecessor, MIP III, closed at its hard cap of $3 billion in 2014.
Old Ironsides Energy LLC
Old Ironsides Energy LLC acquires and develops assets in the upstream and midstream sectors in Canada and the U.S.
Included in its portfolio are 18 companies. It most recently partnered with Dallas-based Longhorn Midstream Holdings LLC, formed in February. In 2015, Old Ironsides partnered with Brazos Midstream Holdings LLC to pursue acquisition and development of midstream assets throughout the U.S.
The firm was founded in 2013; its principals were previously members of Liberty Energy Holdings LLC.
Pearl Energy Investments LP
Pearl Energy Investments LP invests in the lower-to-middle-market North American upstream, midstream and oilfield-services sectors. It typically targets opportunities requiring between $25- and $100 million of equity capital and it has $1.2 billion of committed capital under management.
In December, newly formed Cavalcade Midstream engaged in a $150-million partnership with Pearl, Oil Ironsides Energy LLC and Natural Gas Partners (NGP). The San Antonio-based company focuses on midstream solutions in the Permian Basin.
In 2018, Pearl and NGP made a $100-million commitment to Mettle Midstream LLC, which serves producers in unconventional shale plays throughout North America.
Post Oak Energy Capital LP
Post Oak Energy Capital LP strives to develop a diversified portfolio of middle-market energy investments throughout the industry. It makes domestic investments in the upstream, midstream and oilfield-services sectors.
Included in its portfolio are Oryx Midstream Services LLC and Oryx Midstream Services II LLC. Midland, Texas-based Oryx provides oil- and gas-gathering and -processing services to producers throughout the Permian Basin.
In 2018, Oryx successfully completed an open season for a new regional crude-gathering and -transportation system to provide additional pipeline capacity across the booming northern Delaware Basin. Meantime, Oryx II will also operate in the Delaware.
Quantum Energy Partners LLC
Quantum Energy Partners LLC is a leading provider of private-equity capital within the energy industry. It focuses on North American upstream, midstream, oilfield service, energy technology and renewables.
Quantum is an active midstream investor. It has committed more than $2 billion to companies across the U.S. throughout the past five years. Its investments have spanned the Delaware, Midland, Haynesville, Scoop/Stack and Marcellus/Utica plays.
Its portfolio includes XcL Midstream LLC, which operates, develops and acquires midstream assets in southwestern Appalachia, and Midland, Texas-based Oryx Midstream Services LLC.
Oryx is active in the Permian Basin, primarily focused on the Delaware Basin. It is backed by equity commitments from Quantum, Post Oak Energy Capital LP and other private investors.
Tailwater Capital LLC
Led by veteran energy investors Jason Downie and Edward Herring, Tailwater Capital LLC is a growth-oriented, energy-focused and highly specialized private-equity firm. It invests across the midstream and upstream sectors.
Tailwater currently manages more than $2.7 billion in committed capital. The team has executed more than 100 energy transactions in the upstream and midstream sectors representing more than $19 billion in transaction value.
Founded in 2013, the firm currently has 13 investments across the midstream value chain.
Tortoise Capital Advisors LLC
Tortoise Capital Advisors LLC invests primarily in assets and services it believes are indispensable to the economy and society. Its track record of energy-value-chain investment experience and research dates back more than 15 years.
Tortoise’s infrastructure investment expertise includes midstream energy, renewables and water. It advises several energy products, representing approximately $16 billion in assets under management. These include publicly traded closed-end funds, open-end funds, private funds and separate accounts.
Tortoise’s energy strategies are primarily focused on North American long-haul pipelines that earn fee-based cash flows, with a particular focus on natural gas.
Warburg Pincus LLC
U.S.-based Warburg Pincus is a private-equity firm with offices across the globe. It has invested more than $72 billion in more than 845 companies both domestically and internationally.
Its portfolio includes Navitas Midstream Partners LLC, which focuses on emerging basins across North America. The company’s strategy is to build an enduring, producer-focused, independent midstream company. In 2014, Warburg Pincus led a $500-million line-of-equity commitment to Navitas.
Overall, within energy, the firm has committed more than $10 billion to more than 50 investments globally since the late 1980s.
Yorktown Partners LLC
This independently owned and operated asset management firm is dedicated to making private-equity investments in the energy sector.
Since founded in 1983, Yorktown Partners LLC has invested nearly $8 billion in more than 90 companies. Most of the investments span the upstream and midstream sectors, including, for example, Vaquero Midstream LLC, which offers midstream services in emerging plays.
As well, Yorktown has been Momentum Midstream LLC’s primary equity sponsor since 2004. Momentum has built, acquired, operated and maintained assets throughout North America. This includes more than 2,000 miles of gathering pipeline, 12 processing facilities, three NGL-fractionation facilities and more than 1 million barrels of storage.
Michelle Thompson is a freelance writer based in Orange County, Calif., and specializing in energy topics.
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