Brookfield targets midstream MLPs with energy firm deal

Craig Noble, CEO of the asset manager’s public securities business, says the purchase gives Brookfield a ‘standalone energy infrastructure strategy’.

Brookfield Asset Management’s Public Securities Group has acquired a Houston-based energy infrastructure investment firm as it plans to take advantage of tax-efficient master limited partnerships in the US oil and gas industry.

Brookfield did not disclose transaction details for its purchase of Center Coast Capital Holdings, a company managing over $4 billion in assets. The firm also acquired assets from Liberty Street Advisors, a New York-based investment advisor to the Liberty Street family of funds.

The deal gives Brookfield’s public securities division exposure to energy infrastructure assets in the US. It also allows the Toronto-based asset manager to invest using MLPs, which combine the tax benefits of limited partnerships with the liquidity of publicly traded securities.

“The essence of these companies is they are transportation companies, transporting natural gas and oil liquids,” Brookfield PSG chief executive Craig Noble told Infrastructure Investor. “What this acquisition with CCC will bring us is to be able to offer our institutional clients a standalone energy infrastructure strategy.”

Energy firms often use MLPs to manage midstream oil and gas assets, but the structure lost popularity when oil prices slumped. Since prices have rebounded and natural gas demand in the US continues to grow, MLPs have been on the rise again.

“We view the energy infrastructure space, which includes MLPs, as being an interesting market where there’s a lot of investor demand,” Noble said.

In August, Blackstone Group purchased Harvest Fund Advisors, another investment firm focused on US midstream MLPs.

Overall, there has been an uptick in deal activity in the US midstream space this year. Last week, Global Infrastructure Partners agreed to purchase the largest privately held crude oil transportation system in West Texas’s Midland Basin for $1.82 billion. In September, Arclight Capital Partners acquired a 30 percent stake in a BP oil pipeline and in June the Houston Fuel Oil Terminal Company was sold for $2.1 billion.