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Blackstone Weighs Cheniere Energy Partners Stake Sale

Rachel Adams-Heard and Kiel Porter

(Bloomberg) -- Blackstone Group is considering selling its stake in Cheniere Energy Partners LP, according to people familiar with the matter, seven years after agreeing to invest about $1.5 billion in the owner of the first major liquefied natural gas export terminal in the U.S.

The private equity firm is working with an adviser on a potential sale of its interest in Cheniere Energy Partners, a limited partnership created by Cheniere Energy Inc., said the people, who asked to not be identified because the matter isn’t public. Blackstone is seeking a premium for its stake and marketing it to a small number of infrastructure, pension and sovereign wealth funds, said the people.

Blackstone owned 203.4 million common units in the Houston-based company as of Feb. 20, according to regulatory filings. That stake -- about 58% of the company’s outstanding common units -- was worth about $8.9 billion based on its unit price at the close on Monday.

Blackstone began working with an adviser to explore shopping the stake after receiving unsolicited interest from potential buyers, one of the people said. Blackstone is under no pressure to sell and may opt to keep the stake, they said.

Representatives for Blackstone and Cheniere Energy Partners declined to comment.

Cheniere Energy Partners, which fell as much as 0.7% earlier in the day, gained 1.7% to $43.92 per unit in New York on Monday, giving the company a market value of about $21 billion, according to data compiled by Bloomberg.

Blackstone agreed to invest in Cheniere Energy Partners in 2012, when the company was lining up financing under the leadership of Charif Souki, the co-founder and former chief executive officer of Cheniere Energy and Cheniere Energy Partners.

The entity was set up by Cheniere Energy Inc. to house Louisiana’s Sabine Pass, the first major terminal in the lower 48 states to export shale gas overseas. Since then, three other projects have begun producing LNG, with two more slated to start up soon and a long list of others planned or proposed. Sabine Pass now represents more than half of the U.S.’s total LNG export capacity.

While LNG “gets a lot of press,” Blackstone’s David Foley said earlier this year that other products of the shale boom may provide better investment opportunities now that so many companies are vying for a piece of the LNG market. “It’s going to be a little bit more difficult for the startup LNG companies to do what we did seven years ago,” he said.

Cheniere Energy Inc. beneficially owned 51% of Cheniere Energy Partners as of Feb. 20 through its ownership of about 30% of its outstanding common units and all of its subordinated units, according to the company’s annual report.

To contact the reporters on this story: Rachel Adams-Heard in Houston at radamsheard@bloomberg.net;Kiel Porter in Chicago at kporter17@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, ;Liana Baker at lbaker75@bloomberg.net, Christine Buurma

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