Brookfield exits U.S. gas pipeline with $1.7 billion sale

NEW YORK - Brookfield Infrastructure Partners L.P. (NYSE: BIP; TSX: BIP.UN), a prominent player in the Multi-Utilities industry with a market capitalization of approximately $13.4 billion, has finalized the sale of its 25% stake in a U.S. gas pipeline, marking a complete exit from the business. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 3.33, indicating robust short-term financial health. The transaction with an existing business owner has resulted in total proceeds exceeding $1.7 billion. This deal, coupled with prior financing arrangements, has brought in over $900 million in the last 18 months.

The sale price represents a 1.8 times multiple of the current carrying value of the asset, reflecting an attractive internal rate of return (IRR) of 18% and a threefold return on capital since the company’s recapitalization in 2015. This transaction aligns with the company’s track record of delivering value to shareholders, including its impressive 15-year streak of consecutive dividend increases, with a current dividend yield of approximately 6%. Initially, Brookfield Infrastructure acquired a 27% interest in the pipeline through the purchase of Babcock & Brown Infrastructure, later increasing its stake to 50% in partnership with another operator.

Throughout its ownership, the company focused on value creation through organic growth, expanding the pipeline into key regions to connect natural gas supply with utility providers and LNG export facilities, as well as upgrading the existing network to boost capacity.

The financial aspects of the gas pipeline transaction were advised by CIBC Capital Markets and RBC Capital Markets, while legal advice was provided by Vinson & Elkins LLP.

In addition to the pipeline sale, Brookfield Infrastructure has taken steps in its data center monetization strategy by agreeing to sell a 30% interest in a 244-megawatt European data center portfolio for approximately $460 million. The company is also advancing the sale of an additional 60% stake in the portfolio.

Sam Pollock, CEO of Brookfield Infrastructure, noted that these transactions contribute to an impressive start to the year, with over $700 million in proceeds from asset sales since January. This figure is anticipated to near $900 million following the further sell-down of the data center portfolio. Pollock highlighted the progress towards the company’s goal of $5 to $6 billion in asset monetization over the next two years, with continued strong buyer interest in ongoing capital recycling initiatives.

Brookfield Infrastructure operates globally, owning and managing assets in the utilities, transport, midstream, and data sectors. It is the flagship infrastructure company of Brookfield Asset Management, a global alternative asset manager with over $1 trillion in assets under management. InvestingPro analysis suggests the stock is currently trading near its Fair Value, with analysts setting price targets ranging from $34 to $53 per share. For deeper insights into BIP’s valuation and growth prospects, investors can access comprehensive Pro Research Reports, available exclusively to InvestingPro subscribers, covering over 1,400 top US stocks with detailed analysis and actionable intelligence.

This report is based on a press release statement and aims to provide stakeholders with key insights into Brookfield Infrastructure’s recent strategic transactions.

In other recent news, Brookfield Infrastructure Partners reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.04, which fell short of the forecasted $0.1769. However, the company exceeded revenue expectations, posting $21.04 billion against the anticipated $18.95 billion. The firm also reported an 8% year-over-year increase in Funds from Operations (FFO), totaling $2.5 billion, and a 6% rise in FFO per unit to $3.12. Brookfield Infrastructure has been focusing on expanding its digital infrastructure, which includes investments in data centers and telecom towers, contributing to its growth strategy. The company plans to generate $5-6 billion from asset sales over the next two years, with a strategic emphasis on digital infrastructure expansion. Analyst firms like TD Cowen and BMO Capital Markets have shown interest in Brookfield’s capital recycling initiatives and its focus on digitalization. Additionally, the company’s management remains optimistic about the potential of the data sector, driven by ongoing investments and demand for AI and compute resources. Brookfield Infrastructure’s strategic moves and financial performance continue to attract attention from investors and analysts alike.

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