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Blackstone completes $3.2B Tallgrass Energy controlling stake acquisition

Affiliates of Blackstone Infrastructure Partners closed a roughly $3.2 billion acquisition of a 44% interest in Tallgrass Energy LP and full membership interest in Tallgrass' general partner, according to a March 11 news release.

The Blackstone Group LP infrastructure arm purchased the stake from affiliates of Kelso & Co. LP, the Energy & Minerals Group and Tallgrass KC LLC. Affiliates of GIC, Singapore's sovereign wealth fund, was a minority investor in the transaction.

Analysts previously said the deal could make Tallgrass a much bigger midstream player, as it could make the partnership a vehicle for Blackstone to drop down some of the assets it acquired over the past years. "We ... see large drop-down potential across Blackstone's portfolio, including its 32.4% stake in [Energy Transfer LP's Rover Pipeline LLC]," midstream analysts at Robert W. Baird & Co. Inc. previously stated.

The CEO of Tallgrass' general partner David Dehaemers then downplayed the expectation that the deal would lead to Tallgrass becoming a vehicle for Blackstone midstream asset drop downs. "Those are in different funds there, [and] that creates issues internally for them. And then obviously, to the extent there would ever be anything where those might come into Tallgrass, we ... would have to go through our conflicts committee and, kind of, arm's length-type transactions," Dehaemers previously said during a Jan. 31 earnings conference call.