Goldman Doubles Money It Invested in Kinder Morgan LBO, CreditSights Says

Goldman Sachs Group Inc., Richard Kinder and the private-equity firms that bought Kinder Morgan Inc. in 2007 have gained at least 126 percent return on a pretax basis from their $7.8 billion equity investment, according to CreditSights Inc.

Subsidiaries of Goldman Sachs, Carlyle Group, American International Group Inc., Riverstone Holdings LLC and Kinder co- founder Richard Kinder, agreed to pay $14.4 billion for the operator of North American oil and natural-gas pipelines in August 2006. While the deal was struck at the height of the leveraged takeover boom, it stands out as bondholders haven’t taken losses, said Andy DeVries, a CreditSights analyst in New York.

“This LBO remains one of the most unique of the 2005-07 LBO boom,” DeVries wrote in an April 18 report. In August, he calculated the buyout equity investment had gained 69 percent.

Kinder Morgan is the general partner of Kinder Morgan Energy Partners, a publicly traded limited partnership that operates or owns an interest in more than 35,000 miles of pipelines. Chief Executive Officer Kinder and other managers at the firm contributed $2.9 billion of the $7.8 billion equity investment.

Larry Pierce, a Kinder Morgan Energy Partners spokesman, and Goldman Sachs spokeswoman Andrea Raphael, didn’t immediately return calls seeking comment.

To contact the reporter on this story: Pierre Paulden in New York at

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