Goldman Partly Vends Stake in KMI

On Wednesday, Houston-based Kinder Morgan Inc. ( KMI - Analyst Report ) , a natural gas pipeline operator, announced the selling of stakes by three of its investors. These investors include The Goldman Sachs Group Inc.’s ( GS - Analyst Report ) investment funds, The Carlyle Group and Riverstone Holdings LLC.

Kinder Morgan priced the secondary offering of 63 million of its common stock at an average price of $31.88. The stock offering comprised of shares sold by these investors.

Goldman will be selling 36.7 million shares out of the total holding of 134.8 million shares for about $1.2 billion. Both Carlyle Group and Riverstone Holdings hold 51.2 million shares each in Kinder Morgan. Out of this, Carlyle will sell 12.7 million shares and Riverstone would part away 13.6 million shares.

However, Kinder Morgan and its management are not selling any shares, and therefore will not be receiving any proceeds.

The common stock offering is expected to be completed by earlier next week. Barclays Plc ( BCS - Snapshot Report ) is acting as the underwriter for the offering.

Goldman’s stake sell followed the controversial acquisition of El Paso Corporation by Kinder Morgan in May 2012. Goldman’s involvement in the deal was the main reason behind this contention.

Goldman, holding 19.1% stake in Kinder Morgan and having two board members in the company, acted as an advisor to El Paso for the deal. Therefore, shareholders of EI Paso sued the company to stop this merger doubting Goldman as an advisor, but the case was settled soon and shareholders’ approval was received.

Goldman currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Further, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.