Private equity firms maintain a robust appetite for energy infrastructure, actively capitalizing on the sector’s stable cash flows and strategic importance, even as some have exited investments in recent years.
In a significant transaction this April, Brookfield Infrastructure acquired Colonial Enterprises for approximately $9 billion. The primary asset is the Colonial Pipeline, which is the largest refined product system in the US, running from the Gulf Coast to Northeast. Additionally, the deal implies a valuation of roughly 9x EBITDA, a premium over current public market averages. For context, the Alerian MLP Infrastructure Index (AMZI) was trading at a weighted average EV/EBITDA multiple of 8.52x as of November 28, based on consensus 2026 estimates. This dislocation highlights the potential value opportunities for investors in midstream ETFs.
Strategic Minority Stakes and Basin Exposure
Beyond massive takeovers, firms are targeting strategic minority stakes in key assets to gain exposure to specific basins. In February, ArcLight Capital Partners purchased a 25% interest in the Gulf Coast Express natural gas pipeline from Phillips 66 (PSX) for roughly $865 million.
Similarly, Sixth Street committed $1.5 billion in November for a stake in BP’s onshore midstream assets in the Permian and Eagle Ford basins. Further expanding the footprint of private capital, I Squared Capital recently acquired a stake in the Matterhorn Express Pipeline. Meanwhile, KKR secured an interest in Sempra Infrastructure Partners to gain exposure to LNG export facilities.
Market Dynamics: Exits and Consolidations
The environment remains dynamic, with some private equity firms selling their positions to public buyers. Targa Resources Corp. (TRGP), for example, recently announced the acquisition of Stakeholder Midstream, a Permian gathering and processing company. This marks a private equity exit that consolidates assets into a public player.
The overarching trend suggests that private equity continues to view midstream opportunities as attractive. For advisors, this continued private interest validates the long-term value proposition of midstream investments in portfolios.
The Alerian MLP ETF (AMLP) provides access to the AMZI index, which yields 7.8% as of December 2.
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