IFM makes US midstream splash with $10.3bn Buckeye purchase

Australian fund manager adds $6.5bn in equity value to the $12bn it has invested in US infrastructure since 2006 by acquiring the petroleum distributor.

Australian fund manager IFM Investors has struck a deal valued at $10.3 billion to add a fourth midstream asset to its portfolio.

The firm’s all-cash transaction to acquire Houston-based Buckeye Partners represents a $6.5 billion equity value, which IFM is funding through its open-ended vehicle IFM Global Infrastructure Fund, according to a statement from the Australian fund manager. The deal to purchase Buckeye, a publicly-traded master limited partnership, equals $41.50 per common unit, the manager said.

“[Buckeye] is very entrenched in being able to provide essential services to one of the most populous parts of the US; those attributes make it interesting to us,” Julio Garcia, head of IFM’s infrastructure group in North America, told Infrastructure Investor. “As a long-term investor, this deal complements the existing midstream investments we already have in the sector, and it continues to diversify the infrastructure assets we oversee globally.”

Buckeye manages 6,000 miles of pipeline, over 100 delivery locations and 115 liquid petroleum terminals, which gives the company the capacity to store over 118 million barrels of oil products, according to IFM’s statement. The company’s board of directors voted unanimously to approve the deal, which is expected to close by the end of this year.

IFM manages three other midstream assets in its $39.1 billion infrastructure portfolio, which includes the firm’s 2007 investment in Colonial Pipeline, a Georgia-based company managing oil and gas transportation assets. Since 2006, the firm has invested $12 billion of equity in US infrastructure, according to Garcia.

“Buckeye continues to diversify the overall exposure we have,” Garcia explained. “This is one company, but it has a large number of individual assets that make up the overall portfolio comprising Buckeye.”

IFM’s portfolio is spread across 32 investments in North America, Australia and Europe. In addition to Colonial, the firm has invested in two port terminal assets and the Indiana Toll Road.

The most recent deal IFM announced was in March when the firm purchased a 30 percent stake in Polish container terminal group DCT Gdansk for an undisclosed amount.