MSI now 100% owner of pipeline company

Morgan Stanley Infrastructure has purchased all outstanding interest in Southern Star Central Pipeline Corp. The fund manager had held 40% of the midstream company.

Morgan Stanley Infrastructure (MSI) has taken full possession of Southern Star Central Corporation, a pipeline operator that MSI has part-owned since 2010.

MSI announced its acquisition Thursday, revealing the Morgan Stanley Infrastructure Partners (MSIP) fund had purchased all remaining stock in Southern Star for an undisclosed sum.

MSI, the infrastructure arm of Morgan Stanley, first invested in Southern Star in March 2010, purchasing a 40 percent equity interest in the Kentucky-headquartered company.

Southern Star is responsible for the Southern Star Main Gas Pipeline, a 6,000-mile natural gas transmission and storage network concentrated in the US Midwest, predominantly in Kansas, Missouri and Oklahoma. The company was founded in 1904. Jerry Morris is chief executive.

John Veech, head of North and Latin America investing for MSI, said he believed Southern Star has good geographic location as well as strong management, making the company “attractive” to MSI.

Veech also pointed out MSI is bullish on midstream as a subsector of energy.

“Midstream is just a very large opportunity,” Veech said, adding the emergence of shale gas coupled with the development of technologically advanced drilling has helped to create opportunity in the space.

Midstream energy, or the gathering, processing and storage of oil and gas, is proving to be an attractive space for the asset class in 2012, with pipeline businesses in particular garnering investor attention.

Global Infrastructure Partners (GIP) last month took full ownership of Chesapeake Midstream Partners in a deal similar to the Morgan transaction for Southern Star, while ArcLight Capital Partners that month bought Blackwater Midstream Corporation.

MSIP has $4 billion in capital.