Brookfield to buy Colonial Pipeline for $9bn

Brookfield Infrastructure Partners said on April 3 that it had struck a deal, alongside its institutional partners, to acquire 100% of the midstream asset portfolio Colonial Enterprises, including Colonial Pipeline. The acquisition has an enterprise value of around $9bn.

Colonial Pipeline is the largest refined products system in the US, spanning roughly 5,500 miles (8,851 km) between Houston and New York. According to the company’s website, the pipeline carries around 100mn gallons (2.4mn barrels) per day of fuel, including gasoline, jet fuel, diesel and heating oil.

Colonial’s owners are Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) Colonial Partners, IFM (US) Colonial Pipeline 2, KKR-Keats Pipeline Investors, Koch Capital Investments and Shell Midstream Operating. The company was founded by nine refiners in 1962 and has since undergone several changes in ownership. CDPQ bought its stake in Colonial for $850mn from ConocoPhillips in 2012, IFM Investors acquired its 15.8% interest in the company in 2007 and KKR bought its 23.4% stake in 2007. A subsidiary of Koch Industries increased its stake in the company to 28.1% in 2003 and Shell consolidated its 16.13% interest in the company into a single holding in 2019.

A sale now comes as no great surprise, after Reuters reported in mid-2024 that some of Colonial’s owners were exploring a sale of their stakes in the company. At the time, people familiar with the matter said the owners were hoping to achieve a valuation in excess of $10bn for the assets.

Reuters also reported separately on March 31 this year that Brookfield had emerged as the winner of the auction process for Colonial, which the owners of the pipeline had been running over the course of several months, according to sources familiar with the matter.

Brookfield’s equity investment at closing of the deal is expected to be $500mn, representing roughly 15% of the total equity investment and funded entirely by proceeds from recently announced capital recycling initiatives, it said. The transaction is expected to close in the second half of 2025, subject to customary closing conditions, Brookfield added.

In its own announcement, Shell said it had agreed to sell its interest in Colonial to wholly owned Brookfield subsidiary Colossus AcquireCo, for $1.45bn.

“This divestment reflects our focus on performance, discipline and simplification,” stated Shell Trading & Supply’s president, Andrew Smith. “It will allow us to concentrate on areas where we have scale and competitive advantage."

Shell also provided a narrower window for the closing of its portion of the transaction, saying it expected to complete the sale in the fourth quarter of this year.