Blackrock and GIC have announced the acquisition of Kellas Midstream from Antin. Antin was expected to launch an auction process for Kellas Midstream at the end of the year and it appears that Blackrock and GIC moved quickly and were able to agree a deal ahead of the formal auction. No sale price was disclosed but believed to be in the range of £1.4-2.0 billion.
There will be a number of disappointed parties out there who were lining themselves up for the process including the runners-up on the NSMP sale of last year - widely reported as KKR, Macquarie, Partners Group and numerous pension funds.
Kellas owns the CATS pipeline and terminal, a majority stake in the ETS pipeline and is building the new HGS pipeline that serves Premier Oil's Tolmount Area. All of this is critical infrastructure for UK North Sea gas production, without which, the country would be crippled from a shortage of gas. Some of the key hubs that the infrastructure serves include the Cygnus Area (the largest and newest gas field in the Southern North Sea), the Culzean Area (another critical new gas field in the Central North Sea) and the up and coming Tolmount Area.
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Kellas systems
Source: Kellas Midstream |
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CATS system
Source: Kellas Midstream |
In addition, the CATS pipeline appears to be a key contender for export from the massive Glengorm field that was discovered at the beginning of this year and will become an important source of gas for the UK in the decades to come (see
UK North Sea gets shot in the arm with Glengorm).
The advisers to Blackrock and GIC were listed as:
- RBC Capital Markets and Scotiabank as financial advisers
- Herbert Smith Freehills as legal advisers
- Xodus as technical advisers
The full press release below:
Antin sells Kellas Midstream to BlackRock and GIC
Antin Infrastructure Partners, a private equity firm focused on infrastructure investments, announced today that it had signed an agreement to sell Kellas Midstream to BlackRock’s Global Energy & Power Infrastructure Funds (GEPIF III) and GIC, a leading global institutional investor, in a joint venture.
Kellas Midstream owns and operates key gas infrastructure in the UK Central and Southern North Sea. Kellas Midstream comprises: (1) the Central Area Transmission System (‘CATS’): a major gas transportation and processing system which takes gas from the Central North Sea to the CATS reception and processing terminal at Teesside in the North East of England; (2) the Esmond Transportation System (“ETS”): a key subsea pipeline in the Southern North Sea connecting four producing fields to the Bacton gas terminal on the North Sea coast; and (3) the Humber Gathering System (“HGS”): a first-of-its-kind greenfield project to build the infrastructure required for the development of the large Tolmount gas field in the Southern North Sea.
Antin initially acquired a 63% stake in CATS from BG (now Shell) in 2014, later acquiring a 36% stake from BP in 2015. Having fully carved out the business and established a standalone entity, Kellas Midstream grew substantially both via organic growth with connection to new major gas fields such as Stella, Caley & Shaw, Culzean and Vorlich, and by expansion in the UK Southern North Sea with the ETS acquisition and the HGS development. Throughout Antin’s period of ownership, it focused on achieving outstanding operational performance whilst maintaining a clear focus on Health & Safety. Kellas Midstream maintained a perfect safety record with zero Lost Time Incidents for 16 consecutive years. The transaction is expected to close in early 2020.
“We are proud of the significant growth and strategic transformation accomplished during Antin’s ownership over the past five years. We are also grateful for the strong partnership and outstanding performance of Kellas Midstream’s talented management team and dedicated employees. We wish them continued success with their new owners” said Mark Crosbie, Antin’s Managing Partner.
Andy Hessell, Kellas Midstream’s Managing Director, said: “We thank Antin for their significant support over the past five years. GIC and the BlackRock GEPIF team recognise the growth potential of the business we have built and share our strategy to continue to invest, grow and build our portfolio of midstream assets and serve all our customers in the North Sea. We look forward to working with our new partners.”
Mark Florian, Group Head of the Global Energy & Power Infrastructure Funds Team at BlackRock, added: “A growing number of institutional investors are seeking exposure to energy and power investments. Within the sector, energy from gas is viewed as a necessary component of the energy transition as we move towards a lower carbon economy. This investment in Kellas Midstream reflects the focus of GEPIF III on making strong equity investments in mid-market energy and power infrastructure and partnering with outstanding management teams.”
Ang Eng Seng, Chief Investment Officer of Infrastructure at GIC, said: “We are pleased to invest in Kellas, a leading provider of high-quality midstream infrastructure with a strong track record. As a long-term investor, we look forward to partnering with BlackRock and Kellas’ management to support the future growth of the company.”
Bank of America Securities and Citi acted as financial advisers to Antin, and Weil, Gotshal & Manges acted as its legal adviser. RBC Capital Markets and Scotiabank acted as financial advisers to BlackRock Real Assets and GIC, and Herbert Smith Freehills and Xodus acted as their legal and technical advisers respectively.
