NEW YORK—Brookfield Asset Management’s Public Securities Group (PSG) has agreed to buy Center Coast Capital Holdings (CCC), an energy infrastructure-focused investment firm, for an undisclosed amount, according to a statement on Oct. 9.
Houston-based Center Coast Capital has over $4 billion of assets under management and will allow the Brookfield unit to bolster its product offering to include investments in energy assets such as tax-efficient MLPs.
MLPs are the structure used by most energy firms to house their midstream assets that ship and store oil and gas.
The investment comes amid renewed interest from large asset managers to buy into energy investment firms which focus on MLPs, after question marks were raised over the structure’s long-term viability.
Investors lost faith in them in the wake of the 2014 crude price slump as returns struggled to match previous performance and the construction of new pipelines, which these entities relied upon to generate higher profits, slowed.
Older MLPs also suffered from entering the “high splits,” where the percentage of returns going to ordinary investors was reduced over time in favor of the oil producer which originally owned the pipelines.
To help counter these issues, some MLPs restructured their payout ratios to help bolster returns to ordinary investors, while the revival in crude prices and drilling activity created the need for new pipelines which can be placed within MLPs.
“We knew it would be a good strategic fit, but it’s an interesting time too in terms of where valuations are,” Craig Noble, CEO of Brookfield’s PSG, told Reuters in an interview.
He noted it was an attractive time to make such an investment, given the rebound in oil prices and the benefits of having more infrastructure carrying natural gas, whose price is more stable than that of crude.
In August, Blackstone Group LP (NYSE: BX) said it had agreed to acquire Harvest Fund Advisors, an MLP-focused investment firm, for an undisclosed amount.
Brookfield PSG’s acquisition of CCC is expected to close in first-quarter 2018, subject to customary closing conditions and regulatory approvals.
As part of the CCC deal, Brookfield PSG is also buying certain assets of New York-based Liberty Street Advisors and two of its affiliates. The units are third-party marketing and servicing agents of CCC products to investment firms.
Recommended Reading
From Days to Minutes: AI’s Potential to Transform Energy Sector
2024-11-24 - Despite concerns many might have, AI looks to be the next great tool for the energy industry, experts say.
Fugro’s Remote Capabilities Usher In New Age of Efficiency, Safety
2024-11-19 - Fugro’s remote operations center allows operators to accomplish the same tasks they’ve done on vessels while being on land.
Range Resources Counters M&A Peer Pressure with Drilling Efficiencies
2024-11-14 - Range Resources doesn’t feel the need to give into M&A peer pressure as it focuses on the efficient development of its current asset base, President and CEO Dennis Degner tells Hart Energy.
EnerMech Secures Contract with Major North Sea Operator
2024-11-13 - EnerMech will monitor the condition of the U.K. assets in accordance with safety and operational standards.
2024 E&P Meritorious Engineering Awards for Innovation
2024-11-12 - Hart Energy’s MEA program highlights new products and technologies demonstrating innovations in concept, design and application.