Episode 9: Blackstone and Tallgrass

Episode 9: Blackstone and Tallgrass
SL Advisors Talks Energy

00:00 / 00:08:15


In this week’s podcast, Simon Lack is going to talk about the ethical gulf revealed by Blackstone’s offer to take Tallgrass private.


Show Notes:

In our business we invest alongside clients

Highly attractive feature

SEC rules designed to protect clients

CFA charterholder also has ethical rules

Designed to protect clients

Client assets take priority over ours

Selling a position higher than clients unthinkable

But that’s what TGE have done with Blackstone

January Blackstone bought 44% of TGE at $22.47

Sideletter later revealed TGE management could sell at $26.25 within year

Qs on earnings call. Dehaemers reaffirmed his personal stake.

“…there is no intention of Blackstone doing anything here untoward.”

Investors concluded Dehaemers still invested alongside

Last week offer to take private at $19.25. Mgt still get $26.25

Worse than selling at higher price

Mgt no exposure to sale price

No incentive to support stock

TGE very weak in August, due to questions on investment spending and recontracting rates on pipelines

Mgt provided little transparency

If they had same downside they would have

In fact, lower TGE made BX more likely to buy, triggering sideletter price

Mgt benefitted from lower price

We’re invested in TGE

Unconscionable for us to sell at higher price than clients

Especially so to have sideletter like TGE

Why are ethical standards followed by asset managers so much higher than public companies?

Had several discussions with David Dehaemers. Liked him.

Should never have had such a sideletter

Huge disappointment.

Shows huge ethical gulf between rules for asset managers and for public companies

Hopeful management will reconsider and ensure equal treatment

Restore alignment of interests



Private Equity Sees Value in Unloved Pipelines


Blackstone and Tallgrass Further Discredit the MLP Model




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