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Pennsylvania regulators OK SteelRiver gas deal

The firm’s $910m purchase of natural gas utilities in Pennsylvania and West Virginia is now one step closer to completion, though the latter state has delayed its decision on the deal. Both jurisdictions must approve the sale before the transaction, already 18 months in the works, can reach financial close.

The Pennsylvania Public Utility Commission has unanimously approved the sale of a gas company to infrastructure fund SteelRiver Infrastructure Partners, bringing the 18-month old transaction one step closer to completion.

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The deal involves the purchase of two natural gas distribution utilities, People’s Natural Gas Company in Pennsylvania and Hope Gas in West Virginia, from Richmond, Virginia-based energy company Dominion Resources. SteelRiver agreed to buy the assets from Dominion in July 2008 for $910 million.

The Pennsylvania regulator’s decision overturned an earlier rejection of the deal by an administrative judge. However, the transaction is dependent upon SteelRiver also obtaining approval from West Virginia’s Public Service Commission, which has deferred its decision on the deal due to the complexity of the case.

SteelRiver bid the assets when it was still operating as a Babcock & Brown-managed fund under the name Babcock & Brown Infrastructure Fund North America. The $1.9 billion fund’s management team separated from Babcock earlier this year after the Australian investment bank went into administration.

Vittorio Lacagnina, a spokesperson for SteelRivier, said he expects the transaction could close before the end of the year if the West Virginia regulator approves the deal.

If the transaction does close, it will be the fund’s fourth large acquisition, Lacagnina said, and its first post-Babcock separation. It will also make the fund approximately two-thirds invested, Lacagnina added, with a majority weighing toward energy assets.