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GIC, BlackRock buy UK gas pipeline firm Kellas Midstream

SINGAPORE sovereign wealth fund GIC and the world’s biggest asset manager BlackRock have inked a deal to buy Kellas Midstream from private equity firm Antin Infrastructure Partners.

Kellas Midstream owns and operates key gas infrastructure in the UK Central and Southern North Sea.

GIC and BlackRock’s Global Energy and Power Infrastructure Funds (GEPIF) III are making the purchase via a joint venture, for an undisclosed amount.

The deal is expected to close in early 2020.

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Kellas Midstream comprises gas transportation and processing system Central Area Transmission System (CATS); the Esmond Transportation System (ETS), a subsea pipeline in the Southern North Sea; and the Humber Gathering System (HGS), a greenfield project building the infrastructure for the development of a large gas field in the Southern North Sea.

Antin, which focuses on infrastructure investments, had first acquired a 63 per cent stake in CATS from BG group (now part of Shell) in 2014 for £562 million (S$983.6 million). Antin then increased its stake to 99 per cent by buying a 36 per cent interest from BP the following year.

Kellas Midstream then expanded in the UK Southern North Sea by acquiring ETS and the HGS development.

It has also connected to new major gas fields such as Stella, Caley & Shaw, Culzean and Vorlich.

A growing number of institutional investors are seeking exposure to energy and power investments, said Mark Florian, group head of the GEPIF team at investment giant BlackRock.

“Within the sector, energy from gas is viewed as a necessary component of the energy transition as we move towards a lower carbon economy,” Mr Florian added.

GIC’s chief investment officer of infrastructure, Ang Eng Seng, said the sovereign wealth fund will be a long-term investor and support the future growth of Kellas Midstream.

Bank of America Securities and Citi were financial advisers to Antin, while Weil, Gotshal & Manges acted as its legal adviser.

RBC Capital Markets and Scotiabank were financial advisers to BlackRock Real Assets and GIC, and Herbert Smith Freehills and Xodus acted as their legal and technical advisers respectively.