MSIP’s Southern Star up for sale

Morgan Stanley first invested in the natural gas pipeline and storage facility in 2010 through its maiden infrastructure fund.

Morgan Stanley Infrastructure (MSI), the infrastructure investment platform of Wall Street investment bank Morgan Stanley, is looking for a buyer for Southern Star, a natural gas pipeline and storage facility it owns exclusively through one of its infrastructure funds, several sources told Infrastructure Investor on Tuesday.

MSI first invested in the asset in March 2010, when it acquired a 40 percent stake through Morgan Stanley Infrastructure Partners (MSIP), its first infrastructure fund which closed in 2008 on $4 billion. The remaining 60 percent was acquired in August 2012.

Southern Star comprises approximately 6,000 miles of mainline and branch transmission pipelines as well as a network of eight underground storage fields. It has a mainline delivery capacity of 2.4 billion cubic feet per day and serves metropolitan areas in Missouri, Kansas and Oklahoma.

Last November, Southern Star was one of several assets cited in a Senate investigation involving Morgan Stanley, Goldman Sachs and JP Morgan with respect to the banks' physical commodities-related activities.

The Senate Permanent Subcommittee on Investigations focused on the three lenders because it alleged that, over the past decade, they have been “the largest bank holding company participants in physical commodity activities.”

In its report, the result of a two-year investigation, the Senate committee raised concerns related to keeping banking separate from commerce, which it said could lead to unfair trading advantages, market manipulation, catastrophic event risks and conflicts of interest.

It is unclear whether Morgan Stanley's plan to sell the asset is related to the Senate investigation or part of its fund's exit strategy.

The firm did not respond to a request for comment.