IMM Investment buys stake in Texas Express Pipeline in $1 bn co-investment

South Korea’s IMM Investment Corp. has agreed to buy a 35% stake in Texas Express Pipeline, a joint venture for natural gas liquids transportation, in $1.08 billion co-investment with a US infrastructure investment firm.

The investment is divided into $300 million in preferred shares, $250 million in common shares and $530 million acquisition financing, according to an IMM Investment source on Dec. 23.

IMM Investment took up the $300 million preferred shares that three Korean brokerage firms -- Mirae Asset Daewoo Co. Ltd., Shinhan Financial Investment Co. Ltd. and Eugene Investment & Securities Co. Ltd. – underwrote for resale to domestic institutional investors.

The preferred shares are expected to generate low-teen returns per year, the source added.

Boston-based ArcLight Capital Partners took over the $250 million common shares, while Kookmin Bank and a Chinese bank provided the acquisition financing.

The source declined to disclose the Chinese bank’s name which a Korean news media identified as Industrial and Commercial Bank of China.

IMM and ArcLight acquired the 35% stake from Enbridge Inc., one of early-stage investors in Texas Express Pipeline, via their special purpose company established for the co-investment.

Texas Express, operated by Enterprise Products Partners LLP since 2013, sends natural gas liquids from the Rockies, Permian Basin and Midcontinent regions to storage complex in Mont Belvieu, Texas.

After the 35% equity deal, Enterprise owns a 35% interest in Texas Express, with Western Gas Partners holding 20% and DCP Midstream holding the remaining 10%.

LOOKING ACROSS LNG SUPPLY CHAIN

The IMM source noted that the equity purchase was aimed to earn stable returns over a longer period of time and part of its effort to expand oil and gas investment portfolio across the supply chain.

In 2014, IMM Investment acquired a majority of Hyundai LNG Shipping Co. Ltd.

“After investing in downstream and midstream, we are now looking to invest in upstream. We are looking across the LNG value chain,” the source told the Korean Investors.

He added that the equity deal had nothing to do with Texas Express Pipeline’s capacity expansion designed to enhance access to its export market.

IMM Investment manages approximately 4 trillion won ($3.4 billion) of assets, of which 3.5 trillion won is allocated for private equity investment and the remaining 500 billion won in venture capital funds.



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