Exit: ArcLight selling North Sea Midstream to Wren House Infrastructure


[Context: On July 23, ArcLight announced an agreement to sell its North Sea Midstream Partners to Wren House Infrastructure. Terms were not disclosed. Further details, advisors and related links are below.]


Wren House to Acquire North Sea Midstream Partners Limited from ArcLight
– Wren House to acquire 100% of ArcLight’s interest in the business
– NSMP is the largest independent midstream infrastructure business serving both the UK and Norwegian sectors of the North Sea, processing around 25% of UK natural gas

LONDON and BOSTON, July 23, 2018 /PRNewswire/ — Wren House Infrastructure Management (“Wren House”), the London-based global infrastructure investor, and an affiliate of ArcLight Capital Partners (“ArcLight”), a private equity firm focused on energy infrastructure investments, have signed an agreement for the sale and purchase of North Sea Midstream Partners (“NSMP”), the largest independent North Sea midstream business. Wren House has agreed to acquire ArcLight’s entire stake in the company.

NSMP has interests in and operates four large scale natural gas transportation and processing assets in and around the North Sea. The assets, which form a key part of the UK’s gas infrastructure, include a 67% operated interest in the Shetland Island Regional Gas Export System pipeline (“SIRGE”), which transports natural gas from the prolific West of Shetland basin, and a 100% operated interest in the Frigg UK pipeline (“FUKA”) which transports gas from the SIRGE pipeline and various fields in the Northern and Central North Sea. NSMP also owns a 100% operated interest in the associated St. Fergus Gas Terminal (“SFGT”) and the Teesside Gas Processing Plant (“TGPP”).

NSMP was established in 2012 by ArcLight, Mike Wagstaff (the former CEO of Venture Production plc) and the senior management of TGPP, including CEO Andy Heppel, to acquire and consolidate assets in the midstream sector of the North Sea’s oil and gas industry. Through this partnership, NSMP successfully integrated its FUKA, SIRGE, and SFGT investments, demonstrated a strong track record of securing new business via long-term contracts, implemented numerous operational initiatives, and helped to bring new fields online, including the Greater Laggan Area, Breagh, and Stella Harrier.

Wren House was attracted to NSMP’s core infrastructure characteristics with a strong revenue stream underpinned by long-term contracts, diversification across various North Sea gas basins within NSMP’s catchment areas, including Norway, and the potential for future growth, as well as its excellent management team with a successful track record in operations and business development. Wren House has a long-term ownership horizon and NSMP is an excellent addition to Wren House’s global infrastructure investment portfolio, which includes other critical UK infrastructure assets (such as Associated British Ports, London City Airport and Thames Water), and other investments in companies in Spain, Latin America, Turkey and Australia.

Dan Revers, the Founder and Managing Partner of ArcLight, said:

“NSMP was the first platform to bring the independent midstream model developed in the US to the UK North Sea. We are incredibly proud of leading the charge in what is now a well-established part of the North Sea’s energy infrastructure. NSMP’s management have been a great partner to ArcLight over the six years we worked together. We congratulate Andy Heppel and his team on their tremendous accomplishments and wish them continued success with Wren House.”

Hakim Drissi Kaitouni, the Managing Director of Wren House, said:

“This acquisition underlines Wren House’s long-term successful strategy of investing in superior quality platforms. NSMP’s catchment areas, in particular the West of Shetland basin, represent one of the most promising areas in terms of exploration and future developments. Our deep experience in energy infrastructure, operational expertise and financial strength make Wren House uniquely qualified to acquire NSMP. We are excited to continue building on the foundations set by ArcLight and are pleased to support NSMP as it continues to deliver the highest level of service to its customers, whose needs are expected to rapidly grow driven by positive production outlook and new development activities.”

Andy Heppel, the CEO of NSMP, said:

“We are proud to have worked with ArcLight to successfully acquire and integrate the TGPP, St. Fergus, FUKA and SIRGE investments and build NSMP to be the largest independent midstream business serving both the UK and Norwegian sectors of the North Sea. We thank ArcLight for their significant support over the past six years and look forward to working with Wren House Infrastructure in continuing to grow our business and in providing essential gas transportation and processing services to all our customers. The combination of NSMP’s great base business with Wren House’s financial expertise and commitment to operational excellence will be the trigger for continued development of the NSMP infrastructure in the North Sea.”

The transaction is expected to complete in 2018, following the receipt of customary merger clearance. Terms of the transaction have not been disclosed.

BofA Merrill Lynch acted as exclusive financial adviser to ArcLight and Freshfields Bruckhaus Deringer LLP acted as its legal adviser. Jefferies and Macquarie Capital acted as financial advisers to Wren House and Slaughter and May acted as its legal adviser.

About Wren House Infrastructure

Wren House, based in London, UK, was established in 2013 as an operationally independent UK limited company. Wren House is a captive global infrastructure investment manager, with a focus on delivering attractive risk-adjusted equity returns through a disciplined investment approach, a long-term responsible investment horizon and active asset management. With a flexible and commercial approach to investment, Wren House has a clear mandate and a long-term view without the need to exit.

Wren House Infrastructure has a team of over 20 professionals and has invested approximately $4bn of private debt and equity capital. The Wren House portfolio includes investments in airports, ports, water, energy generation (conventional and renewables), distribution and transmission, and spans 12 countries and over 10,000 employees in the UK, Europe, Australia, Central and South America. Wren House is also active in midstream, digital infrastructure (including towers, fibre and cloud), healthcare and education infrastructure. Wren House is an affiliate of the Kuwait Investment Office (“KIO”). The KIO is the London office of the Kuwait Investment Authority. Wren House currently has a commitment of $5bn to fund investment. Wren House’s other investments in the UK and Europe include Associated British Ports (ABP), London City Airport and Thames Water.

About ArcLight Capital Partners

ArcLight is one of the leading private equity firms focused on energy infrastructure investments. Founded in 2001, ArcLight helped pioneer an asset-based private equity approach to investing in the dynamic energy sector. ArcLight has invested more than $20 billion in over 100 transactions since inception. Based in Boston, the investment team employs a hands-on value creation strategy that utilizes in-house technical, operational and commercial specialists as well as the firm’s 850-person asset management affiliate. More information about ArcLight, and a complete list of ArcLight’s portfolio companies, can be found at www.arclightcapital.com

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