Blackstone Energy Partners has backed a natural gas pipeline project under construction in the US in a $1.57 billion deal that gives the private equity firm a 32.4 percent interest.
The company’s energy-focused division agreed to acquire from Energy Transfer Partners a 49.9 percent stake in the holding company that is the majority owner of the Rover Pipeline. Energy Transfer, the pipeline’s main sponsor, owns 50.1 percent of the holding company and said it would use deal proceeds to pay down debt and fund future projects.
The $4.2 billion, 713-mile pipeline is expected to transport 3.25 billion cubic feet of natural gas per day from West Virginia, Ohio and Pennsylvania to Canada. The project has come under environmental scrutiny over a series of industrial spills. The Federal Energy Regulatory Commission opened an investigation into the project in June.
It’s been an active market for energy infrastructure assets this year, and Blackstone again was behind one of the largest deals so far. In April, the firm agreed to pay $2 billion for EagleClaw Midstream Ventures, one of the largest natural gas pipeline operators in Texas.
During the same month, First Reserve sold its oil pipeline and terminal company to NuStar Energy for $1.47 billion, and CVC Capital Partners purchased a 25 percent stake in Spanish oil transport company CLH from Ardian for an estimated $1.5 billion.
Overall, Blackstone has invested more than $12 billion across the energy industry. The firm closed its second energy-focused fund, Blackstone Energy Partners II, in February 2015 on $4.5 billion.
At the group level, infrastructure is an asset class gaining prominence in Blackstone’s investment strategy. In May, Blackstone announced it was launching an infrastructure fund that would target $40 billion and is anchored with a $20 billion commitment from Saudi Arabia’s sovereign wealth fund.
Blackstone’s new infrastructure business is led by senior managing director Sean Klimczak, who has worked on the firm’s energy investments since 2005.