SCHEDULE 13D/A: Global Infrastructure Partners Affiliate Reduces Stake in Hess Midstream LP Through $100 Million Unit Repurchase

GIP II Blue Holding, L.P., an affiliate of Global Infrastructure Partners, has reduced its beneficial ownership in Hess Midstream LP to 23.2% following a $100 million unit repurchase by HESM Opco and a subsequent Class B Share distribution.

Summary

• Hess Midstream LP's operating company, HESM Opco, completed a unit repurchase transaction on January 15, 2025, acquiring 2,572,677 Opco Class B Units for approximately $100 million.
• The repurchase price for the Opco Class B Units was $38.87 per unit.
• Of the repurchased units, 967,541 were acquired from Hess Investments and 1,605,136 from GIP II Blue Holding, L.P.
• Following the repurchase, an equal number of Class B Shares held by Hess Investments and Blue Holding were cancelled by Hess Midstream LP for no consideration.
• In connection with the repurchase, a Class B Share Distribution Agreement was executed on January 15, 2025, where New HESM GP LP distributed 3,210,272 Class B Shares to HIP GP LLC, which then immediately distributed 1,605,136 Class B Shares each to Hess Investments and Blue Holding.
• As a result of these transactions, GIP II Blue Holding, L.P. and its related entities now beneficially own 31,234,403 Class A Shares or redeemable Opco Class B Units, representing 23.2% of the 104,086,900 Class A Shares outstanding as of January 13, 2025.

Sentiment

Score: 6

Explanation: The unit repurchase and associated share distribution are part of a planned capital management strategy. While reducing a major holder's stake, it also returns capital and potentially improves per-share metrics for remaining holders, indicating a neutral to slightly positive operational move.

Positives

• The unit repurchase demonstrates a commitment to returning capital to shareholders, which can be viewed positively by investors.
• The repurchase at $38.87 per unit provides a clear valuation point for the Class B Units involved in the transaction.
• The transaction streamlines the ownership structure by cancelling repurchased units and corresponding Class B Shares.

Future Outlook

The document does not provide explicit forward-looking statements or guidance regarding future operations or financial performance.

Industry Context

The midstream sector often involves complex ownership structures and capital management strategies. Unit repurchases are a common method for companies to optimize their capital structure and return value to unitholders, particularly in mature or stable industries like midstream energy infrastructure. This transaction reflects a specific capital allocation decision by Hess Midstream and its major unitholders, GIP and Hess Investments, aimed at managing their respective stakes and capital.

Related Party Transactions

• The Unit Repurchase Agreement and Class B Share Distribution Agreement involve Hess Investments and GIP II Blue Holding, L.P., which are significant unitholders and related parties to Hess Midstream LP.

Stakeholder Impact

• Shareholders/Unitholders: The repurchase reduces the number of outstanding units, which could potentially increase earnings per unit for remaining unitholders. For the selling unitholders (Hess Investments and Blue Holding), it represents a liquidity event and a reduction in their direct ownership stake.
• Company (Hess Midstream LP): The transaction impacts the company's capital structure by reducing outstanding units and cash reserves.

Key Dates

Keywords

Hess Midstream LP, HESM, Global Infrastructure Partners, GIP, Unit Repurchase Agreement, Class A Shares, Class B Units, SEC filing, Schedule 13D, beneficial ownership, midstream, energy infrastructure