Tallgrass Energy Partners L.P. will pay $1.8 billion to acquire Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co., the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, and KMP’s 50% interest in the Rockies Express Pipeline, the company announced Monday. Tallgrass is owned by the management team of Tallgrass, Kelso & Co., and a limited group of investors led by The Energy & Minerals Group including Magnetar Capital.
Tallgrass Energy Partners, LP (Tallgrass), today announced that it has entered into a purchase and sale agreement with Kinder Morgan Energy Partners, L.P. KMP -0.61% to buy Kinder Morgan Interstate Gas Transmission (KMIGT), Trailblazer Pipeline Company, the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, and KMP’s 50 percent interest in the Rockies Express Pipeline (REX). Tallgrass will acquire these assets for a total cash consideration of approximately $1.8 billion. Including the proportionate amount of REX debt, this amount is equivalent to a value of $3.3 billion. The transaction, which is subject to Federal Trade Commission (FTC) approval, is expected to close in the fourth quarter. Tallgrass is owned by the management team of Tallgrass, Kelso & Company, and a limited group of investors led by The Energy & Minerals Group including Magnetar Capital.
Tallgrass is led by CEO, David G. Dehaemers, Jr., and an experienced management team with over 70 years of combined midstream energy experience. Mr. Dehaemers previously served as CFO and EVP of corporate development at Kinder Morgan from 1997 to 2003. He served as the EVP of corporate development at Inergy, LP from 2003 to 2007 and was one of the owners of Inergy, LP’s general partner, NRGP, when it went public in 2005. In his career he has led more than $14 billion of midstream energy merger, acquisition and development opportunities.
“Tallgrass Energy Partners is excited about the opportunity to acquire these premier midstream assets. We look forward to working with a talented group of Kinder Morgan employees and will leverage their integral experience as we continue the high level of operational performance of these assets, work to expand the asset base and grow the company. The conversion of the Pony Express Pipeline portion of KMIGT into oil service, the seamless transitioning of its gas customers, and placing it in service during the second half of 2014 will be a significant focus for near term growth. In addition, we will be exploring some promising growth projects on the east end of Rockies Express to maximize the potential of this state-of-the-art pipeline,” said Mr. Dehaemers.
“We are also extremely pleased to be working with The Energy & Minerals Group and Kelso & Company. They both bring a lot to the table and the opportunity to leverage their deep bench of expertise and significant financial backing greatly strengthens our overall abilities in this space,” added Mr. Dehaemers.
“We are equally pleased and excited to once again be partners with David and his management team. The combination of these high quality assets, talented management team, and the financial backing and industry expertise of the equity sponsors creates a very powerful platform for future growth,” stated John T. Raymond, Founder and CEO of EMG.
The Energy & Minerals Group is the management company for a series of highly specialized private equity funds with total investor commitments of approximately $4.8 billion. EMG focuses on investing across various facets of the global natural resource industry including the upstream and midstream segments of the energy complex. Since inception in 2006, EMG has invested in 9 midstream energy transactions comprising approximately $2.6 billion of equity capital.
Kelso & Company is one of the oldest and most established firms specializing in private equity. Since 1980, Kelso has invested in over 115 companies in a broad range of industry sectors with aggregate initial capitalization at closing of over $40 billion. Representative energy investments include: Buckeye GP Holdings L.P., CVR Energy, Inc., Crescent Point Energy Corporation, Hunt Marcellus LLC, Tervita, and Venari Resources LLC.