Kohlberg Kravis Roberts & Co. L.P. (together with affiliates, “KKR”) today announced the purchase of Chevron’s 23.44% stake in the Colonial Pipeline Company (“Colonial”). KKR acquired the minority stake in partnership with the National Pension Service of Korea (“NPS”), the fourth largest public pension fund in the world and an emerging global investment manager. The sale closed on October 8, 2010.
The Colonial pipeline system is the largest refined products pipeline in North America, running from supply centers in the Gulf Coast to customers located along the Eastern seaboard of the United States. Chevron was one of five shareholders of Colonial.
“Colonial plays an important role in supplying the eastern U.S. markets with a variety of fuels. The pipeline is an attractive infrastructure asset with a history of stable earnings and a high quality customer base. It also has the benefit of having an experienced management team with a stellar operational track record,” Marc Lipschultz, the global head of KKR’s Energy and Infrastructure business, said.
Henry Kravis, Co-Founder of KKR, added, “NPS is a sophisticated pension fund manager that has been expanding its global capabilities under CEO Jun’s outstanding leadership. We are excited to embark upon this new partnership and look forward to working together on other investments in the future.”
Georgia-based Colonial is an interstate common carrier that owns and operates a 5,519 mile petroleum products pipeline system which delivers, on average, 100 million gallons of gasoline, kerosene, diesel fuel, home heating oil and aviation fuels per day.
“We are undertaking this investment with KKRbecause it fits well withour effortsto bothdiversify our investments around the world andto seek long-term, stable returns to match the long-term needs of our beneficiaries,” Jun Kwang-woo, Chairman and CEO of NPS said.
Since Dr. Jun assumed his current role, the National Pension Service has been diversifying its investment portfolio by moving away from bond-focused portfolios to put more weight on alternative and equity investments – as part of an effort to enhance overall returns. Through its alternative investments allocation, NPS has been expanding its investments in infrastructure assets and real estate globally, including North America and Europe.
“This transaction is a testimony to KKR’s global platform, our energy and infrastructure expertise, and close relationships with key investors. We are excited to be able to partner with NPS, an important strategic Asian investor in our funds, to make the investment,” Joseph Bae, the Managing Partner of KKR Asia, said.
KKR has been investing in energy and infrastructure for more than twenty years. Today, KKR’s global energy and infrastructure business spans the globe and covers the full energy supply chain. Transactions in the energy sector include Energy Future Holdings (Texas), Texas Genco (Texas), East Resources (Pennsylvania)and Hilcorp (Texas) and in the infrastructure sector,ITC Transmission (Michigan).
KKR is an active investor across Asia, with more than 140 employees located in offices in Beijing, Hong Kong, Mumbai, Seoul, Sydney and Tokyo. Recent transactions include Oriental Brewery, Korea’s second largest producer of beer and the acquisition of Intelligence, a Japanese job recruitment service. KKR also has significant stakes in Ma Anshan Modern Farming, a leading dairy farm business in China; Far Eastern Leasing, a leading financing company in China for small and medium-sized enterprises; Dalmia Cement, India’s largest private cement maker; and Coffee Day Resorts which operates the largest retail chain of coffee shops in India under the name of Caf Coffee Day.