ETF Trends
ETF Trends

Alerian Capital Management, the index provider for some of the largest exchange traded products tracking master limited partnerships (MLPs), is reportedly exploring a sale.

Texas-based Allerian, a closely held company, has begun interviewing banks to help advise it on a transaction that could value the firm at more than $1 billion, reports Matthew Monks for Bloomberg, citing unidentified sources close to the matter.

Alerian is the index provider to the ALPS Alerian MLP ETF (NYSEArca: AMLP), which had $9.6 billion in assets under management at the end of the third quarter, and the JPMorgan Alerian MLP Index ETN (NYSEArca: AMJ). AMJ, the largest MLP ETN, has $6.6 billion in assets under management.

Alerian’s exploration of a sale appears well-timed. Over the past two years, there has not been a month where investors have pulled money from MLP ETFs and ETNs.While MLP ETFs and ETNs represent just a fraction of the total $437 billion allocated to MLP assets, the $22 billion held by the 23 MLP ETPs trading in the U.S. is double the amount held just three years, ago according to Barron’s.

Investors have added over $1.6 billion to AMLP this year. [A Big Year for MLP ETF Inflows]

“The volume of initial public offerings for energy MLPs in the U.S. has risen more than 40 percent this year to about $6.2 billion” and 2014 is “the first year that an MLP has raised more than $1 billion in an IPO,” according to Bloomberg.

Alerian is far from the only index provider to explore a sale of itself this year. Earlier this year, the London Stock Exchange acquired indexing giant Russell Investments from Northwestern Mutual Life Insurance for $2.7 billion in cash. [LSE Acquires Russell Investments]

Barclays (NYSE: BCS) is also looking to sell its indexing business and last week it was reported that Citigroup (NYSE: C) is mulling a sale of its indexing unit.

The Bloomberg article did not identify potential suitors for Alerian. The firm also sponsors the Alerian Energy Infrastructure ETF (NYSEArca: ENFR), which had $16.5 million in AUM at the end of the third quarter.

Alerian MLP ETF

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of AMLP.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.