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Blackstone Group and GSO Capital Partners take stake in Crestwood Midstream Partners

The Blackstone Group and its hedge fund management subsidiary GSO Capital Partners have taken a stake in Crestwood Midstream Partners, a private company active in the midstream sector of t

The Blackstone Group and its hedge fund management subsidiary GSO Capital Partners have taken a stake in Crestwood Midstream Partners, a private company active in the midstream sector of the oil industry, which encompasses the processing, storage, marketing and transport of commodities including crude oil, natural gas, natural gas liquids and sulphur.

Blackstone and GSO have combined with Kayne Anderson Energy Funds and Crestwood’s management to provide the firm with USD500m in equity capital commitments. The company was formed last November by a team led by oil industry veteran Bob Phillips with capital of USD150m to acquire and develop North American midstream assets and businesses.

Crestwood aims to draw upon its management’s industry experience and relationships to grow through the acquisition of strategic assets, the recruitment of experienced midstream personnel and investment in organic infrastructure projects.

‘Blackstone and GSO are extremely knowledgeable energy investors which, along with Kayne Anderson, provide Crestwood with the financial support and industry credibility to become a significant midstream company,’ says Phillips, the company’s president and chief executive. ‘The expansion of our investor base also validates our investment strategies and positions Crestwood to be at the forefront of midstream activity over the coming years.’

Danny Weingeist, a senior managing director of Kayne Anderson, says: ‘We welcome Blackstone and GSO into Crestwood and look forward to the benefits of partnering with these leading private investment firms to pursue a broad range of midstream investment opportunities that are emerging in the current marketplace.’

Blackstone’s and GSO’s investment in Crestwood highlights their view that the midstream sector of the energy industry offers significant growth opportunity. This is supported by record supply development in many regions of the US, broad-based investment in new energy infrastructure projects, and potential consolidation opportunities that may emerge in the coming years.

‘We believe the Crestwood management team possesses a deep understanding of the sector and has the credibility and relationships to build a world-class midstream business and deliver attractive returns to our investors,’ says Blackstone senior managing director David Foley.

‘Blackstone has successfully backed management teams in start-up ventures in other segments of the energy sector, such as Sithe Global Power in power plant development and Kosmos Energy in oil exploration.’

The Blackstone Group’s businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds, as well as financial advisory services including mergers and acquisitions advisory, restructuring and reorganisation advisory and fund placement services.

GSO Capital Partners is a credit-oriented alternative asset manager with approximately USD23bn of assets under management in senior debt funds, hedge funds and mezzanine funds focused on the leveraged finance marketplace. GSO was acquired by The Blackstone Group in March and has subsequently absorbed Blackstone’s existing debt investment businesses.

A division of Kayne Anderson Capital Advisors, which has some USD9bn in assets under management, Kayne Anderson Energy Funds manages USD1.85bn of private capital invested in exploration and production, midstream and oilfield services companies from its offices in Houston and Los Angeles.

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