Private equity firm ArcLight Capital Partners agreed to acquire TransMontaigne GP LLC from NGL Energy Partners LP (NYSE:NGL), for $350 million in cash. The transaction is expected to close by the end of this month.

Shares of NGL Energy Partners (NGL) surged 46.38% to $13.35 on Friday.

TransMontaigne GP is a general partner of TransMontaigne Partners LP (NYSE:TLP), a terminaling and transportation company based in Denver. TransMontaigne’s marketing business will remain part of NGL’s refined products business. NGL will retain TransMontaigne Product Services, customer contracts, and its line space on the Colonial and Plantation pipelines.

“The deal could be a harbinger of more such private equity transactions in the beleaguered MLP space, and seems to have contributed to gains among midstream MLPs,” said Barron’s. “The Alerian MLP ETF (AMLP), which tracks the midstream sector, was up 3% Friday, even as the price of crude fell to $33 a barrel.”

“The purchase of assets from NGL is most likely just the start of private equity purchases of MLP assets or companies. The undervaluation of assets is profound and will eventually be arbitraged,” Jay Hatfield, portfolio manager of the InfraCap MLP ETF (AMZA) told Barron’s.

“I believe this is a very positive transaction for both NGL and ArcLight,” said Mike Krimbill, CEO of NGL Energy Partners. “NGL will remain the long-term exclusive tenant in the TLP Southeast terminal system and we look forward to our ongoing partnership with ArcLight. ArcLight has been great to work with and NGL will enter into certain commercial transactions with, as well as provide various transition services for, ArcLight.”

“We are excited to acquire a leading refined products platform that is complementary to our recent activity in the refined product storage and logistics segment,” said Dan Revers, Managing Partner and co-founder of ArcLight. “The acquisition of TransMontaigne GP will mark the fourth major refined product terminals acquisition in the last twelve months and is emblematic of a concerted strategy to acquire and develop infrastructure along the refined products value chain. We are also pleased to continue the long-term relationship with NGL as a significant customer and look forward to expanding the relationship as we grow the assets.”

NGL will retain approximately 3.2 million common units it owns in TLP and has granted an option to ArcLight to purchase 800,000 of those common units at a future date.

UBS Investment Bank is serving as NGL’s financial advisor and Winston & Strawn LLP is serving as NGL’s legal counsel. BofA Merrill Lynch is serving as the exclusive financial advisor to ArcLight and Andrews Kurth, LP is serving as the exclusive legal advisor to ArcLight.

TransMontaigne Partners LP operates as a terminaling and transportation master limited partnership providing integrated terminaling, storage, transportation and related services for customers engaged in the distribution and marketing of petroleum products, crude oil, chemicals, fertilizers and other liquid products. The company operates along the Gulf Coast; in the Midwest; in Houston and Brownsville, Texas; along the Mississippi and Ohio Rivers; and in the Southeast United States. TransMontaigne GP LLC serves as the general partner of the company. TransMontaigne Partners LP was formed by TransMontaigne Inc. (formerly NYSE:TMG) in 2005 and is headquartered in Denver, Colorado.

NGL Energy acquired Morgan Stanley’s controlling interest in TransMontaigne Partners LP for $200 million in 2014.

NGL Energy Partners LP is a Delaware limited partnership, which owns and operates a vertically integrated energy business with five primary businesses: crude oil logistics, water solutions, liquids, retail propane and refined products and renewables. The company was founded in 1940 and is headquartered in Tulsa, Oklahoma.

ArcLight is one of the leading private equity firms focused on North American and Western European energy assets. Since its establishment in 2001, ArcLight has invested over $13.9 billion across multiple energy cycles in more than 90 investments. Headquartered in Boston, MA with an additional office in Luxembourg, the firm’s investment team brings extensive energy expertise, industry relationships and specialized value creation capabilities to its portfolio.



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