Some owners of Colonial Pipeline are exploring options to sell their shares, with expectations that the sale could value the US fuel transportation company at more than $10bn, reported Reuters, citing sources.
This development comes as energy consumption in the US continues to grow, increasing demand for pipeline infrastructure.
The potential sale would also serve as a valuation test for Colonial Pipeline, which suffered a significant cyberattack in 2021 that disrupted its operations.
Caisse de dépôt et placement du Québec (CDPQ), a Canadian pension fund, has initiated the sale of its 16.6% holding in Colonial, the sources said.
Furthermore, co-owners Shell (16.13%), IFM Investors (15.8%) and KKR (23.4%) are also deliberating on the potential sale of their shares, the sources said.
Infrastructure funds, public pension funds and sovereign wealth funds are considered likely buyers.
A unit of Koch Industries, another co-owner, intends to retain its 28.1% stake, according to a source.
Discussions about the sale are in the early stages, and according to sources, there is no guarantee that a transaction will occur.
Colonial directed Reuters’ inquiries to its owners. CDPQ and KKR opted not to comment, and IFM, Koch and Shell did not respond to requests for comments, the publication said.
Colonial’s pipeline system, which spans more than 8,851km from Houston, Texas, to New York’s harbour, can transport 100 million gallons of various fuels daily.
The 2021 cyberattack on Colonial caused a shutdown that led to significant disruptions in fuel supply across numerous filling stations and airports.
The US Department of Transportation’s Pipeline and Hazardous Materials Safety Administration later found that Colonial had not adequately prepared for manual operations, which worsened the impact of the cyberattack.
CDPQ acquired its stake in Colonial from ConocoPhillips in 2012 for $850m (C$1.17bn).
IFM and KKR obtained their shares in 2007 and 2010, respectively. Shell consolidated its stake in 2019, while Koch has maintained its current position since 2003.
Interest in North American energy pipelines has surged in recent years, leading to increased deal-making activity in the sector.
Earlier this month, Kinetik sold a 16% interest in the Gulf Coast Express Pipeline to an affiliate of ArcLight Capital for an upfront cash payment of $510m and an additional deferred $30m due upon a final investment decision on the pipeline’s capacity expansion.
