Stronger – Midstream M&A Slows as Companies Focus on Buying and Selling Specific Assets

There’s been a lull in midstream M&A activity the past few months, but several companies in that space have been making significant adjustments to their portfolios, either by acquiring assets from others or selling ownership interests in their own businesses. There’s also been a lot of buzz about major deals that may be in the works. In today’s RBN blog, we’ll discuss a few of the more interesting midstream transactions this fall and what’s spurring them, and also look at the general state of the midstream sector.

In July and then in September, we looked at the wide range of midstream deals that were consummated this past spring and summer. At least a couple of them were massive, including Brookfield Infrastructure Partners’ roughly $9 billion purchase of the Colonial Pipeline system, Western Midstream Partners’ $2 billion acquisition of produced water specialist Aris Water Systems, and Targa Resources’ $1.8 billion buy of the remaining 45% of what had been its 55/45 Badlands joint venture with units of Blackstone. We also examined the plan by WaterBridge (another produced water company) to go public via an initial public offering (IPO). (The IPO was successfully completed on September 17.)

Today, we’ll discuss another apples-and-oranges assortment of midstream deals, beginning with the late-September announcement by Sempra that it has reached an agreement to sell a 45% ownership interest in Sempra Infrastructure Partners (SIP) to affiliates of private equity giant KKR & Co. and the Canada Pension Plan Investment Board (CPPIB) for $10 billion in cash. The transaction, expected to close in either Q2 or Q3 2026, will leave Sempra with a 25% stake in SIP, which owns a number of existing and planned LNG export terminals and gas pipelines in the U.S. and Mexico, as well as several natural-gas-fired and renewable power facilities. (More on some of these in a moment.) The KKR/CPPIB consortium, in turn, will have a 65% stake (up from KKR’s current 20%) and the Abu Dhabi Investment Authority (ADIA) will have 10%.

In a statement, Sempra said the prospective sale is part of a broader initiative by the company “to simplify (its) business model, improve financial performance and reduce risk” by focusing primarily on its regulated utility businesses in California and Texas. The sale of a 45% stake in SIP, Sempra said, will move it toward the company’s goal of (1) getting 95% of its earnings from Sempra’s regulated utilities and (2) paying for its utilities’ 2025-29 capital spending plans without issuing more stock. In Texas, Sempra owns a roughly 80% stake in Oncor (the state’s largest electricity distribution utility) and a half-interest in Sharyland Holdings, a much smaller utility in South Texas. In California, Sempra owns San Diego Gas & Electric and SoCalGas, a large gas distribution utility in Southern California.

SIP was formed in early 2021 by the consolidation of two Sempra units — Sempra LNG and Infraestructura Energética Nova (aka IEnova). A few months later, KKR took a 20% interest in SIP and a year after that ADIA took a 20% stake. SIP has assembled an impressive portfolio of midstream and power-generation assets, including full or partial ownership of several gas pipelines in Mexico, Texas and Louisiana (solid and dashed black lines in main map and inset maps in Figure 1 below); existing and planned LNG facilities (blue and blue-and-white boxes); and existing and planned solar facilities (green and green-and-white circles).

Sempra Infrastructure Partners’ Assets