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Brookfield Infrastructure and Kinder Morgan to Sell Pipeline Stake for $830 million

By Matthew DiLallo - Feb 22, 2021 at 6:24PM

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The infrastructure operators will maintain an interest in the gas pipeline.

Brookfield Infrastructure (BIP -1.25%)(BIPC -0.41%) and Kinder Morgan (KMI 2.20%) have agreed to sell a 25% interest in Natural Gas Pipeline Company of America (NGPL) to funds controlled by ArcLight Capital Partners. The partners will receive $830 million for this stake that they'll split evenly. They'll each retain a 37.5% interest in NGPL, which Kinder Morgan will continue operating. The deal values NGPL at $5.2 billion. 

NGPL is one of the largest interstate pipeline systems in the U.S. The 9,100-mile pipeline transports gas to the Chicago area and to large liquefied natural gas (LNG) facilities along the U.S. Gulf Coast.

Two people shaking hands with pipelines in the background.

Image source: Getty Images.

Kinder Morgan and Brookfield Infrastructure 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. The partners have since invested capital into expanding that pipeline and reducing its debt. They're now cashing in on this investment at a much higher valuation. 

The sale is part of Brookfield Infrastructure's ongoing capital recycling program. It also recently agreed to sell its stake in district energy operator Enwave for $4.1 billion. Brookfield hopes to put those proceeds to use by offering to buy Canadian oil infrastructure company Inter Pipeline (IPL) in a deal valuing it at 13.5 billion Canadian dollars ($10.3 billion).

Meanwhile, Kinder Morgan has been selling assets to shore up its financial profile. It sold its interest in Kinder Morgan Canada and the U.S. portion of the Cochin pipeline for $3.3 billion in 2019. These sales have given it the flexibility to return more cash to shareholders by increasing its dividend and repurchasing stock. 

This sale will boost the financial flexibility of these companies, increasing their ability to achieve their strategies. 

 

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Stocks Mentioned

Brookfield Infrastructure Partners L.P. Stock Quote
Brookfield Infrastructure Partners L.P.
BIP
$37.19 (-1.25%) $0.47
Kinder Morgan, Inc. Stock Quote
Kinder Morgan, Inc.
KMI
$17.20 (2.20%) $0.37
Brookfield Infrastructure Corporation Stock Quote
Brookfield Infrastructure Corporation
BIPC
$41.83 (-0.41%) $0.17
Inter Pipeline Ltd. Stock Quote
Inter Pipeline Ltd.
IPL

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

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