Morgan Stanley Explores Sale Of Key Pipelines In Potential Deal Worth Over $2 Billion

Morgan Stanley Infrastructure Partners is exploring the sale of its majority stake in Brazos Midstream II, a move that could value its holding at more than $2 billion, including debt, according to three people familiar with the matter.

According to a Reuters report, investment bankers from Jefferies Financial Group have been actively seeking potential buyers for MSIP's controlling interest in Brazos in recent weeks. 

Prospective buyers include other midstream companies and investment firms, said the sources, who requested anonymity due to the confidential nature of the discussion.

Brazos Midstream II operates critical infrastructure in the Delaware Basin, a prolific part of the Permian Basin across five Texas counties. The company gathers and transports natural gas, natural gas liquids and oil from wellheads to larger pipelines. Its assets also include natural gas compression facilities and crude storage.

The sale process is ongoing, and there is no guarantee a deal will materialize, the sources cautioned, as MSIP could ultimately retain its investment if the deal is not reached.

Morgan Stanley's infrastructure arm initially acquired Brazos Midstream II in 2018 for $1.75 billion. Later that year, Williams Companies acquired a 15% stake in Brazos by contributing assets. 

However, Williams is not expected to bid for the majority stake being offered by MSIP, the sources said. 

A potential transaction for Brazos Midstream II would underscore the recent trend of dealmaking in the midstream sector, particularly involving privately owned pipeline operators in key U.S. shale plays. 

lately, publicly listed infrastructure companies have been active buyers, seeking to expand their scale and footprint.