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Blackstone Discloses 7% Stake in Kelcy Warren’s Energy Transfer


By Rachel Adams-Heard

(Bloomberg) Blackstone Group disclosed a 6.9% stake in Energy Transfer LP that would make it the second-biggest holder in the pipeline giant after billionaire founder and Chief Executive Officer Kelcy Warren.

The New York-based investment firm said the interest includes units owned by Harvest Fund Advisors, which it bought in 2017. Harvest owned 4% of Energy Transfer’s unit as of the end of last year. Blackstone reported the stake in a regulatory filing after the market closed Wednesday, sending Energy Transfer units up as much as 9.7%.

The disclosure comes just two weeks after the firm closed on its takeout of Tallgrass Energy, another pipeline operator.

Warren has built Energy Transfer into one of the biggest pipeline operators in the U.S., taking on politically contentious projects that its rivals have steered clear of, while also showing an appetite for deals.

Energy Transfer units jumped after Blackstone disclosed stake

Even before the pandemic-fueled collapse in oil prices, Energy Transfer units had lagged those of its pipeline peers. That led some analysts at the end of last year to speculate whether Warren would ever take the company private. The Dallas-based company’s stock is down 46% in the last year as of Wednesday’s close.

Blackstone earlier this month closed on a tumultuous deal to take Tallgrass private, ending a year-long saga that started when the private equity behemoth bought a controlling stake in the company in March 2019. The firm has invested in one of Energy’s Transfer’s projects before, buying a 32% stake in the Rover natural gas pipeline for about $1.6 billion in 2017.

Unlike most of its peers, Energy Transfer has stuck to the master limited partnership structure, once considered a tax-advantaged way to hold pipelines that has struggled to attract investors since a series of policy changes in 2018. The limited partner — Energy Transfer LP — is publicly traded, while the general partner is closely held, with Warren controlling a majority stake.

“Sometimes you need to be defensive,” Warren said at an industry conference in early February. “To run an MLP correctly, you must have a mix of M&A and organic growth.”

Warren’s also hinted that the company could be changing its structure. Enterprise Products Partners LP, Energy Transfer’s main competitor, said Wednesday that its own shift from the MLP model may be put on the backburner while it deals with an historic plunge in oil prices.



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