BlackRock, GIC consider sale of UK gas pipeline assets

BLACKROCK and Singaporean sovereign wealth fund GIC are exploring the sale of a network of gas pipeline assets in the United Kingdom that could fetch about US$2 billion, according to sources familiar with the matter.

The owners are working with investment bank Jefferies Financial Group to find potential buyers for Kellas Midstream, the sources said, asking not to be identified as the matter is private. The company owns a network of pipes, including the 404-kilometre undersea Central Area Transmission System that deliver gas from the North Sea into the UK.

The business is likely to draw interest from infrastructure funds and financial investors keen to gain exposure in the sector, the sources said. A formal sale process was yet to kick off and deliberations are in the early stages, the sources said. The owners could also decide to retain the asset if they cannot find suitable bidders, the sources added.

Representatives for BlackRock, GIC and Jefferies declined to comment.  

A BlackRock infrastructure fund and GIC agreed to buy Kellas from Antin Infrastructure Partners in 2019. Investors are keen to gain exposure to such assets lured by the stable and predictable returns they can provide. BlackRock and Morgan Stanley investment funds agreed in March to buy TC Energy’s Portland Natural Gas Transmission System in a deal valued at about US$1.14 billion.

Aside from the Cats pipeline, Kellas owns the Esmond Transportation System pipeline network and the Humber Gathering System, a project to transport gas from the Tolmount Main field. BLOOMBERG

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