Morgan Stanley Infrastructure Partners is exploring the sale of its majority stake in Brazos Midstream II, with a deal expected to value its holding at more than $2 billion including debt, three people familiar with the matter said.
Brazos moves natural gas, natural gas liquids and oil from the wellheads of five Texas counties to larger pipelines in the Delaware portion of the Permian Basin. The company also owns associated infrastructure including natural gas compression capabilities and crude storage.
Investment bankers at Jefferies Financial Group in recent weeks have been shopping MSIP’s controlling stake in Brazos to potential buyers, including midstream companies and investment firms, the people said, asking not to be identified because the discussions are private.
The sale process is ongoing and a deal, along with the price sought by MSIP, may not materialize, they cautioned. MSIP may also choose to hold onto its investment, they added.
Spokespeople for Morgan Stanley, Brazos, and Jefferies all declined comment.
Morgan Stanley’s infrastructure investment arm first bought into Brazos Midstream II in 2018, purchasing the company for $1.75 billion. Later that year, a deal was struck with Williams Companies, in which Williams contributed assets in exchange for a 15% stake in Brazos.
Williams is not expected to bid on the MSIP majority stake, the sources said.
Williams did not respond to a comment request.
A transaction involving Brazos Midstream II would join the steady stream of midstream dealmaking in the last year involving privately-owned pipeline companies in the heart of the U.S. shale industry. Most are being bought by publicly-listed infrastructure operators seeking to boost scale.
Energy Transfer acquired WTG Midstream for $3.25 billion from a group led by infrastructure fund Stonepeak. ONEOK spent $2.6 billion to buy Medallion Midstream from Global Infrastructure Partners. And Kinetik purchased Durango Permian for $765 million from an affiliate of Morgan Stanley Energy Partners.
(Reporting by David French in New York; Editing by Joe Bavier)