GIP deal for Chesapeake Midstream concluded

Global Infrastructure Partners closed a $2bn purchase of Chesapeake Midstream. The fund manager will shell out $2bn more for an additional LP interest in the company.

A heavily publicised transaction giving $10 billion fund manager Global Infrastructure Partners (GIP) total control of publicly traded pipeline operator Chesapeake Midstream Partners has wrapped up.

GIP paid $2 billion to erstwhile co-owner Chesapeake Energy Corporation for Chesapeake Midstream, a master limited partnership (MLP) GIP and Chesapeake Energy co-founded in 2009. The global fund manager is also planning to fork over a further $2 billion for an interest in Chesapeake Midstream subsidiary Chesapeake Midstream Development LP.

But its deal for Chesapeake Midstream, a blue chip stock, coupled with its £807 million (€990 million; $1.3 billion) purchase of Edinburgh Airport, helped GIP reinforce its standing as a fund manager with deal-making clout, capable of winning a big ticket asset.

In Chesapeake Midstream, GIP is full owner of a company with a 3,953-mile pipeline network located throughout gas-rich Louisiana, Pennsylvania and Texas.

GIP, located in London and New York, brought Chesapeake Energy to market in a successful 2010 initial public offering (IPO).

Meanwhile, Chesapeake Energy had been under pressure to reduce its debt, as well as raise cash amid a plunge in the value of natural gas, prompting its decision to unload Chesapeake Midstream.

In addition, Chesapeake Energy stripped embattled chief executive Aubrey McClendon of his chairmanship for receiving a personal loan from a different company.

“Midstream” energy is the process of gathering, transporting and storing gas and oil.