trending Market Intelligence /marketintelligence/en/news-insights/trending/KLMjeWAR0lJE3Nw5BQo61Q2 content esgSubNav
In This List

Citigroup, Jefferies dominated billion-dollar midstream M&A in 2019


Despite turmoil, project finance remains keen on offshore wind

Case Study

An Energy Company Assesses Datacenter Demand for Renewable Energy


Japan M&A By the Numbers: Q4 2023


See the Big Picture: Energy Transition in 2024

Citigroup, Jefferies dominated billion-dollar midstream M&A in 2019

Citigroup Inc. was the leading financial adviser for billion-dollar M&A deals in North America's energy pipeline industry in 2019, while Jefferies LLC came in at a close second providing those services to parties involved in buying or selling midstream companies and assets.

Citigroup advised on six out of 16 announced transactions that are in S&P Global Market Intelligence's North American coverage universe and included adviser information. Jefferies advised five parties and Evercore Group LLC, Credit Suisse (USA) Inc., Barclays Capital Inc. and Bank of America Corp. company BofA Securities Inc. each advised four parties.

SNL Image

Private equity financing and take-privates dominated midstream M&A in 2019, with investment firms and pension funds involved as buyers in 50% of the deals as oil and gas pipeline stock prices continued their slump and only private entities could afford to snap up attractive prospects. Still, 2019 saw private equity firms become more discerning buyers of midstream infrastructure amid even riskier equity values during the second half of the year. For-sale master limited partnerships such as Western Midstream Partners LP and Noble Midstream Partners LP failed to seal deals with reportedly interested parties.

The Blackstone Group Inc. was the most prolific private investor when it came to billion-dollar pipeline M&A deals. The firm's infrastructure arm was part of a group of investors that first acquired a 44% interest in Tallgrass Energy LP and a 100% interest in its general partner before announcing a complete buyout later in the year, while funds managed by Blackstone's tactical opportunities branch and GSO Capital Partners LP bought a 45% stake in Targa Resources Corp.'s Badlands assets in North Dakota.

Citigroup advised Blackstone for all three of those transactions and Evercore was on the opposite side for two of the deals as an adviser for Targa and Tallgrass. When it came to the buyout of Buckeye Partners LP, however, IFM Global Infrastructure Fund enlisted Evercore, Credit Suisse, Goldman Sachs & Co. Inc. and BofA for what would be the biggest announced midstream deal of 2019. Intrepid Partners LLC and Wells Fargo Securities LLC, which advised Buckeye, each garnered $17.5 million for the $10.03 billion transaction.

The billion-dollar deals list's biggest public corporate M&A transaction was Energy Transfer LP's acquisition of SemGroup Corp. for $5.10 billion. Jefferies earned $9 million in fees for advising SemGroup.

While the majority of 2018 midstream M&A at the billion-dollar level involved internal reorganizations spurred by investors' frustration with the MLP model, only two of similar deals were announced in 2019. First, MPLX LP merged with fellow Marathon Petroleum Corp. subsidiary Andeavor Logistics LP, for which Goldman Sachs garnered $6.5 million as an adviser to Andeavor Logistics. In November, Noble Energy Inc. sold its remaining midstream portfolio to Noble Midstream Partners and eliminated the MLP's required payments to the general partner.

"I thought [Noble Midstream] was an interesting marker for the space," Colton Bean, a midstream analyst at energy investment bank Tudor Pickering Holt & Co., said in a recent interview. "Noble would have preferred to off-load that entirely. That weighted-average price came in at a combined [8.0x transaction multiple] ... so the idea that you couldn't get a private equity bid to come in above that does draw a little bit of question mark versus what we were seeing a year or two ago."

Still, that does not necessarily mean there are no other potential suitors for midstream partnerships. Scott Peak, a managing partner at Brookfield Asset Management Inc.'s infrastructure arm, said in an interview that his firm plans to focus on select take-private opportunities and "large corporate carve-outs" in 2020.