Morgan Stanley’s infrastructure arm has begun reaching out to potential buyers of gas pipeline operator Southern Star Central Corp., people familiar with the matter said.
Morgan Stanley Infrastructure Partners, working with investment bank Tudor Pickering Holt & Co. on the sale, sent offering documents to potential bidders including Tallgrass Energy Partners LP (NYSE: TEP) and TransCanada Corp. (NYSE: TRP), said the people, asking not to be identified discussing private information.
The business is valued at as much as $1.5 billion, the people said. Morgan Stanley Infrastructure is also soliciting bids from operators of gas pipelines including The Williams Cos. Inc. (NYSE: WMB) and Spectra Energy Corp. (NYSE: SE) and Boardwalk Pipeline Partners LP (NYSE: BWP), as well as other infrastructure investors including Caisse de Depot et Placement du Quebec and Macquarie Group Ltd., the people said.
Representatives for Morgan Stanley, Caisse de Depot and Boardwalk declined to comment. Representatives for Tudor Pickering, TransCanada, Tallgrass, Spectra and Williams didn’t immediately return calls for comment.
Takeovers of companies that help move and process oil and gas surged last year, as Targa Resources Corp. (NYSE: TRGP), Williams and other pipeline operators sought to bulk up. Morgan Stanley is approaching potential buyers while other sellers—including Whiting Petroleum Corp. (NYSE: WLL) and Oasis Petroleum—are also seeking to offload oil and gas transport and storage infrastructure.
Southern Star, based in Owensboro, Ky., operates 6,000 miles of natural gas pipelines in Kansas, Missouri and elsewhere in the Midwestern U.S., according to its website. Morgan Stanley’s infrastructure fund acquired 40% of Southern Star in 2010 and the rest of the company in 2012, according to company statements.
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