Natural Gas Pipeline Company: Brookfield Infrastructure and Kinder Morgan agreed to sell a 25% interest in one of the largest interstate pipeline systems in the US:
- 9,100-mile pipeline
- transports natural gas to the Chicago area
- transports natural gas to large LNG facilities along the US Gulf Coast
- the two sold their 25% interest to funds controlled by ArcLight Capital Partners
- the partners will each retain a 37.5% interest in NGPL
- Kinder Morgan: operator
- the deal valued the NGPL at $5.2 billion
- Kinder Morgan and Brookfield acquired full control of NGPL in 2015
- they paid a combined $242 million for a 53% interest in the company, valuing it at $3.4 billion
- they're now cashing in on this investment at a much higher valuation
- other deals mentioned in the article
- bottom line: the sale will boost the financial flexibility of these companies, increasing their ability to achieve their strategies
The bigger story here: with all the difficulty building new pipelines (and even keeping old pipelines operating) existing pipelines keep getting more and more valuable. Headwinds which result in huge moats for investors like Warren Buffett:
- regulators
- faux environmentalists
- governors aspiring to run for national office
- sovereign nations inside continental US (that in itself is beyond the pale)
- huge CAPEX
- take longer to build than nuclear reactors
Warren Buffett noticed this decades ago. I think he built Berkshire Hathaway Energy around this strategy. And these companies pay huge dividends.
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