Fresh off buying WPX Energy’s (NYSE: WPX) San Juan Basin gathering system, buyer I Squared Capital said April 14 it sold a 28% stake in the oil, gas and water gathering system to GE (NYSE: GE).

Adil Rahmathulla, Partner at I Squared Capital, told Hart Energy that was the plan all along — to sell a stake to a financial partner that could continue to grow the company and inject capital as the system expands.

I Squared’s new company, Cube Midstream, will operate and manage the new 220-mile system in New Mexico. The global infrastructure fund closed its deal WPX on March 9 to acquire the system for $285 million.

Rahmathulla, who led the deal, said that GE’s 28% stake was purchased on the same terms and conditions as I Squared’s, putting GE’s acquisition at roughly $80 million.

In addition to making the investment in Cube and subsidiary Whiptail Midstream, GE will collaborate with I Squared Capital to invest in other near-term opportunities for oil and gas infrastructure in the basin.

“GE’s tremendous industry depth and experience makes them an invaluable partner,” he said. “This transaction is an important step in the execution of our strategy to position Whiptail as the premier gathering system in the San Juan Basin.”

WPX is the main producer for the line, though a number of other producers contribute, Rahmathulla said.

I Squared, with $4 billion in assets under management, owns 22 U.S. power plants, a utility in Ireland, solar plants and toll roads in India and wastewater treatment plants in China. But the fund still saw WPX’s gathering system as an investment that met what Rahmathulla calls the funds’ “idiosyncratic risk-reward proposition,” he said.

“We’re not only about buying large companies,” he said. “We also buy projects … that offer the appropriate risk adjusted return.”

As with its other holdings, management teams run I Squared’s various companies and projects.

Likewise, Cube Midstream will look to “make investments in similar assets in other basins in the U.S.”

“The idea would be then you would have accumulated a portfolio of gathering system with access to different geographies and different producers,” Rahmathulla said.

Future purchases would take on the same considerations that buying WPX’s gathering system did.

“You have to start each situation with whether the basin itself is economic,” Rahmathulla said.

The next condition is to ensure I Squared is comfortable with the producers in a basin and their long-term cash flow profile.

“Finally, we’re not just buying a static business, but helping grow it organically, increasing the breadth of the operations,” he said.

With the San Juan midstream asset, I Squared saw high quality, low cost acreage within the upper Gallup play.

“Our gathering system is really the only gathering system,” he said.

I Squared is a 10-year fund, though on average it holds investments for 6 to 8 years. Whether it’s within the basin or outside, they will be around for some time to come.

“We tend to take a long term approach to everything we do,” Rahmathulla said.

I Squared Capital is an independent global infrastructure investment manager focusing on energy, utilities and transport in North America, Europe and elsewhere. The firm has offices in New York, Houston, London, New Delhi, Hong Kong and Singapore.

Darren Barbee can be reached at dbarbee@hartenergy.com.

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