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MPLX LP is a $15bn enterprise value, investment grade (Baa3/BBB-) midstream MLP with diversified operations. Its legacy pipeline and logistics business primarily centers on the refining footprint of Marathon Petroleum Corp (NYSE: MPC). In December 2015, MPLX purchased MarkWest Energy Partners LP (MWE) to expand into natural gas gathering and processing operations.

Capital Need

In early 2016, MPLX was exploring options to fully fund its 2016 capital expenditure program. MPLX sought to avoid the issuance of common equity, preferring to delay the incremental cost of capital associated with their incentive distribution rights (IDRs) until their projects came online.

Our Approach

Magnetar’s long-term relationship and past transaction experience with MPLX management provided us with a unique opportunity to work with an established partner and provide MPLX with the means to achieve their strategic objectives.

The Details

MPLX reached out directly to a small number of investors, including Magnetar, to solicit interest in a $1 bn convertible preferred equity financing.

Magnetar had a long-term existing relationship with the MPLX management team, having invested in MWE in 2007.

In April 2016, MPLX announced a $1 bn convertible preferred equity financing with Magnetar and three additional investors. The financing allowed MPLX to pre-fund its 2016 capital expenditure program, at a lower cost-of-capital relative to traditional common equity.

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