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.