MLP Index Provider Alerian Said in Early Stage of Exploring Sale

Alerian Capital Management LLC, which manages indexes tracking energy and infrastructure companies, is in the early stages of exploring a sale, people with knowledge of the matter said.

Alerian has begun interviewing banks to help advise it on a transaction that could value the Dallas-based company at more than $1 billion, said the people, who asked not to be identified because the matter is private. The company has told bankers it expects to select an adviser after the Thanksgiving holiday on Nov. 27, the people said.

“Any company that is worth its salt should be for sale at any time for the right price and on the right terms,” Kenny Feng, Alerian’s president and chief executive, said in an interview. He declined to comment on Alerian’s talks with potential advisers or sale plans.

Alerian, founded in 2004, offers indexes for tracking energy companies structured as master-limited partnerships, which get tax perks for distributing most of their income to investors. The company is exploring a sale as exchanges and financial data services providers seek to expand their index operations.

Russell, Barclays

London Stock Exchange Group Plc agreed in June to buy exchange-manager Frank Russell Co. for $2.7 billion. Barclays Plc started an auction for its index operations earlier this year, people familiar with the situation have said, drawing offers from potential buyers including CME Group Inc., McGraw Hill Financial Inc. and Nasdaq OMX Group Inc. The unit could fetch about $1 billion, one person said in August, more than twice what the bank initially expected.

More than $21 billion is linked to Alerian’s indexes including the Alerian MLP Index and Alerian MLP Infrastructure Index, according to a presentation on the company’s website in October.

Demand for MLPs is rising. The volume of initial public offerings for energy MLPs in the U.S. has risen more than 40 percent this year to about $6.2 billion, data compiled by Bloomberg show. It’s also the first year that an MLP has raised more than $1 billion in an IPO, the data show.

Antero Midstream Partners LP raised $1.15 billion this month, including an overallotment, and Shell Midstream Partners LP raised $1.1 billion in October. Shell Midstream, the pipeline partnership backed by Europe’s largest oil company, has surged more than 50 percent since its debut, while Antero Midstream has climbed more than 10 percent.

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