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Private equity joins midstream deals to fund LNG and power demand projects
Recent transactions include ONEOK’s $9.0 billion equity investment from Apollo to help finance a $4.4 billion acquisition and debt paydown.
The North American midstream sector is entering a period of accelerated growth as liquefied natural gas exports and power generation demand rise, driving multi-billion-dollar project backlogs, according to ETF Trends. To fund the next wave of energy infrastructure while maintaining balance sheet discipline, midstream operators are increasingly partnering with strategic private equity through joint ventures.
Historically, private equity in midstream has backed standalone platforms or taken minority stakes in pipeline and LNG export projects, with earlier deal activity peaking around 2018. The focus later shifted from Permian Basin gathering and processing infrastructure tied to crude production to natural gas pipelines serving LNG demand, while newer deals also point to growing interest in projects serving rising power demand.
ETF Trends also highlights how private equity is increasingly using a structured joint venture model that can support large public midstream companies in funding multi-billion-dollar backlogs. In these arrangements, public operators generally retain majority ownership, operational control, and commercial management, while private equity partners target long-term, contracted, fee-based yields and may receive buyback windows as a potential liquidity option.
Among the most recent examples, ONEOK secured a $9.0 billion nonvoting equity investment from Apollo to fund its approximately $4.4 billion acquisition of Brazos Midstream’s Permian Midland Basin natural gas gathering and processing assets and use remaining proceeds to pay down debt. The transaction is structured as a parent-level investment, with Apollo receiving a percentage of OKE operating cash flows up to a fixed return cap and an option for OKE to acquire Apollo’s interest starting on the eighth anniversary of the deal closing.
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