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Brookfield Wants to Buy Blackstone's 41% Stake in Cheniere Energy Partners

By Rich Duprey - Aug 12, 2020 at 9:10AM

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The private equity firm began shopping its stake last month as liquefied natural gas exports plummeted.

Alternative asset manager Brookfield Asset Management (BAM 0.30%) is reportedly negotiating with Blackstone Group (BK 1.20%), a private equity investment firm, to acquire its 41.2% stake in Cheniere Energy Partners (CQP -1.05%). The position is worth an estimated $7.8 billion.

Cheniere Energy Partners operates the Sabine Pass liquefied natural gas (LNG) export terminal in Louisiana on the coast of the Gulf of Mexico. It is a master limited partnership that is a subsidiary of the country's largest LNG producer, Cheniere Energy (LNG 2.53%).

Liquefied natural gas facility

Image source: Getty Images.

A bet on energy's rebound

Bloomberg reports the infrastructure arm of Brookfield is talking with Blackstone about acquiring the stake, which the private equity firm began shopping to several potential deep-pocketed buyers last month. Yet David Foley, head of Blackstone Energy Partners (the energy-focused limited partnership of Blackstone), said almost a year ago it would entertain serious offers from buyers for Cheniere.

"We're very happy with the investment," he told S&P Global Market Intelligence last September, referring to the $1.5 billion Blackstone invested in Cheniere in 2012. "It's great. If someone else sees that value and wants to make an offer, we'd have to consider it."

LNG exports have plunged over 60% in 2020, with the Sabine Pass terminal hit especially hard. Data from the U.S. Energy Information Administration shows exports hit a record high of 8 billion cubic feet per day (Bcf/d) in January, but have since fallen to an average of 3.1 Bcf/d in July.

Sabine Pass suffered a 33% decline in exports, while Cheniere's Corpus Christi terminal in Texas plunged 28%. Freeport LNG's terminal in Freeport, Texas, which made its first shipment last September, saw a 6% drop. 

Representatives from Brookfield, Blackstone, and Cheniere declined to answer Bloomberg's questions about the negotiations.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Brookfield Asset Management Inc. Stock Quote
Brookfield Asset Management Inc.
BAM
$53.72 (0.30%) $0.16
The Bank of New York Mellon Corporation Stock Quote
The Bank of New York Mellon Corporation
BK
$44.90 (1.20%) $0.53
Cheniere Energy, Inc. Stock Quote
Cheniere Energy, Inc.
LNG
$158.69 (2.53%) $3.92
Cheniere Energy Partners, L.P. Stock Quote
Cheniere Energy Partners, L.P.
CQP
$48.26 (-1.05%) $0.51

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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