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Morgan Stanley Infrastructure Partners ups stake in Southern Star gas pipeline

24 Aug 2012

Morgan Stanley Infrastructure, the dedicated infrastructure investing platform of Morgan Stanley Investment Management, has increased its ownership stake to 100 per cent of Southern Star Central, parent company of Southern Star Central Gas Pipeline.

MSIP, a $4bn global infrastructure fund, originally acquired a 40 percent stake with 50 per cent governance rights in Southern Star in March 2010.

Southern Star is the primary gas transmission and natural gas storage facility provider for several major US Midwest cities and power generation providers. It serves metropolitan areas in Missouri (Kansas City, St Louis, Springfield, St Joseph and Joplin), Kansas (Wichita, Kansas City, Topeka and Lawrence) and Oklahoma (Oklahoma City). It Star receives gas supplies from major producing regions, including the Hugoton, Anadarko and Rocky Mountain basins. The system has 23 interconnections with other major interstate and intrastate pipelines, allowing its customers to source from additional producing basins, including the San Juan and Permian basins.

As a regulated asset supplying crucial services to a fully contracted customer base, Southern Star is considered a core infrastructure asset, said John Veech, head of Americas investing for Morgan Stanley Infrastructure. “Opportunities to invest in the US natural gas pipeline sector are scarce, and we are very pleased to acquire full ownership of another regulated core infrastructure asset,” he said. “We have worked closely with Southern Star’s seasoned management team to initiate growth projects and implement a strategic capital expenditures program. We look forward to further building the business and continuing to provide excellent service to customers.”

Over the past two years, Southern Star has made a number of capital expenditures, including maintenance and pipeline integrity projects, and steps to enhance public safety. In addition, a number of growth projects have been completed or are under way, including the Elk City Storage Field Expansion, which was placed into service in April 2011 and now provides an additional 4 Bcf of storage capacity to the system.

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