GIP Buys $4B Of Chesapeake Assets, Nearing $6B For Fund II

Firm: Global Infrastructure Partners

Fund: Global Infrastructure Partners II LP

Target: $6 Billion

Raised So Far: $5.5 Billion

Global Infrastructure Partners, a New York-based buyout firm focused on infrastructure, has agreed to buy out Chesapeake Energy Corp.’s interest in the two firms’ pipeline joint venture, Chesapeake Midstream Partners LP, for $2 billion. GIP also agreed to buy Chesapeake’s pipeline development group, which wasn’t part of their joint venture, for an additional $2 billion, bringing the transaction’s total value to more than $4 billion. The joint venture creating Chesapeake Midstream Partners was created in 2009.

For GIP, the investment marks the firm’s largest investment to date. GIP, which just finished its second close on its latest fund, Global Infrastructure Partners II LP, has so far raised $5.5 billion. The interim close puts the fund very close to its $6 billion target. Since GIP is still fundraising, a spokesman said he would not be able to comment.

Besides its new Chesapeake investment, GIP is perhaps best known for its recent deals to buy and operate prominent U.K. airports, such as London’s Gatwick Airport, which it bought from BAA for more than $2 billion in 209, and London City airport, which it bought in 2006. For its third U.K. airport purchase, in April, GIP bought the Edinburgh Airport, Scotland’s busiest airport, for $1.3 billion, from BAA, the giant airport operator that still runs London’s Heathrow Airport. The U.K.’s Competition Commission forced BAA to sell off one of the two Scotland airports it operated, Edinburgh’s or Glasgow’s.

Other companies the firm has invested in include Australia’s Port of Brisbane.

Generally, infrastructure investments, with their long investment horizons and steady income streams, have been getting more attention from long-term investors including pensions and sovereign funds. And while some investors, such as Canadian pensions, have been directly buying up assets like Chilean toll roads, few investors have the necessary capability, resources and desire to invest in and manage infrastructure assets outside of the traditional fund structure.

So far, between Fund II and its debut fund, which raised $5.6 billion in 2008, the firm has raised more than $10 billion.

Global Infrastructure Partners is headed by Adebayo Ogunlesi, who formed GIP after being global head of investment banking at Credit Suisse.

Oklahoma City-based Chesapeake, the nation’s second-largest natural gas producer, has been in the headlines lately because of revelations that its chief executive, Aubrey McClendon, used his company’s resources to finance personal expenses, such as repairs to his home after a hail storm and the use of corporate jets for family vacations on the company’s dime. Those revelations were earlier reported by Reuters, Buyouts’ sister news service. Separately, the Securities and Exchange Commission has opened an “informal inquiry” into the firm. Finally, Chesapeake has been under extreme financial pressure due to persistently low gas prices.

McClendon is known as one of the primary owners of the Oklahoma City Thunder, the professional basketball team that has made it into the NBA finals.