Jefferies Energy Team Thrives in Pipelines M&A Under New Leader

(Bloomberg) -- When Blackstone Group LP sought advice buying a Texas pipeline operator last year, it turned to Pete Bowden, Jefferies Financial Group Inc.’s global head of energy investment banking.

The alternative investing giant sat across the negotiating table from Bowden in 2017, when it purchased EagleClaw Midstream Ventures. Bowden brokered that $2 billion sale and Blackstone liked his work. So it tapped him to handle EagleClaw’s first big acquisition.

”He’s a great tactician and can ably represent either a seller or a buyer, which is unusual, as most bankers are good at one or another,“ said David Foley, a Blackstone senior managing director.

Bowden, 45, has become a go-to banker for U.S. oil and gas infrastructure deals, particularly in the booming Permian Basin, where private equity has been investing heavily in plumbing to get oil to market.

His team has advised on more than $10 billion in Permian pipeline deals in the last two years, according to data compiled by Bloomberg, including EagleClaw’s $950 million purchase of Caprock Midstream and Brazos Midstream’s $1.8 billion sale to Morgan Stanley.

"They knew the players and had the relationships in place," said Brad Iles, chief executive officer of Brazos. "Selling a business can be a roller coaster. Pete in particular differentiated himself as the premier midstream marketing guy in the business."

Pipeline Niche

Jefferies’s energy unit -- among the New York-based investment bank’s most important advisory franchises -- was until recent years best known for its shale M&A work, including innovative land deals for Chesapeake Energy Corp., and jumbo mergers such as XTO Energy Inc.’s $31 billion sale to Exxon Mobil Corp.

Bowden has helped Jefferies carve out a niche in infrastructure in recent years as volatile swings in commodity prices upended the energy M&A market. Pipelines are Bowden’s specialty. He’s been doing deals in the sector since 1998, when he started out as a lawyer structuring master-limited partnerships, or MLPs, with Andrews Kurth LLP.

That experience has benefited Jefferies as so-called midstream operators expand into new areas such as the Permian while simplifying their structures by acquiring affiliates.

Meanwhile, big transactions upstream -- industry jargon for oil and gas explorers -- have largely tapered off. Jefferies gets props ensuring it had the talent in place to capitalize on this shift, according to Foley.

"Its hard sometimes to repeat success, but Jefferies has leveraged their upstream expertise to build a very successful midstream business," he said. "Pete deserves big credit for that."

No Relaxing

"I don’t relax,“ Bowden said in an interview in the Jefferies Houston office. "Look at my hairline."

Jefferies was the No. 4 adviser on U.S. oil and gas mergers and acquisitions by net revenue in 2018, with $111 million, according Dealogic. Goldman Sachs Group Inc. was No. 1 followed by Perella Weinberg Partners LP and Citigroup Inc.

Jefferies was also No. 2 for deals for midstream companies, or entities that control pipelines, processing plants and other infrastructure for handling oil and gas between the wellhead and refinery, behind Barclays Plc, according to Dealogic.

Joining Jefferies

Jefferies hired Bowden in 2012 from Morgan Stanley to build a pipelines practice.

Ralph Eads, the shale deals guru who made Jefferies’s a player in energy M&A, spent three years recruiting him.

”I knew Pete was the guy,“ said Eads, chairman of energy investment banking. ”Once I knew I wanted a midstream business here, I went out and talked to everyone who’d speak to me and passed on a number of people while I waited for Pete to agree.“

The patience paid off.

Bowden helped Jefferies land a choice role in Kinder Morgan Inc.’s $44 billion consolidation of its pipeline empire in 2014, one of the largest ever midstream deals.

Jefferies has either been the No. 1 or No. 2 pipelines M&A adviser for the past three years, according to Dealogic. The firm didn’t rate as a midstream M&A shop before Bowden.

Most of the firm’s energy M&A revenue came from midstream in 2018, according to an internal presentation from the New York-based bank in December. Since mid-2012, Jefferies has advised on more than 75 midstream deals worth more than $200 billion, according to the firm.

Bowden advised water-infrastructure provider Goodnight Midstream this month on its agreement to sell this majority stake to private equity firm TPG in a deal worth more than $1.2 billion.

”Pete, personally, has built a very effective franchise in midstream,“ said Christopher Ortega, a partner TPG. ”Pete is directly engaged, from soup to nuts.”

Energy Leader

That performance has positioned Bowden as the successor to Eads, who joined Jefferies in 2005 when it purchased Randall & Dewey, a boutique oil and gas advisory firm.

Bowden was named global head of energy in August 2018, about two years after being appointed co-head of energy along with Ajay Khurana, who left the firm last year to join a private equity firm.

Bowden and Eads say they are partners when it comes to overseeing the more than 100 energy bankers in group.

”Ralph and I sit four feet apart and we talk on the phone several times a day,“ Bowden said.

They are a study in contrasts.

Bowden is focused and dry. He has a young family and spends his little free time on outdoor pursuits. "I like to hunt and fish," he said.

Eads, 59, is lean and charismatic. He enjoys the gym, tennis -- and wine. ”I do own a vineyard,“ Eads said.

They’re both scrappy competitors. And both believe Jefferies has the best energy investment group in banking. They may need that hutzpah if volatile swings in commodity prices depress dealmaking in 2018.

”We don’t have a 100-year-old, No. 1-M&A brand,“ Bowden said. “We have our intellect, our work ethic and our substantive knowledge. We do not show up for any new piece of business other than fully prepared. I think a lot of our competitors are going through the motions.”

To contact the reporter on this story: Kiel Porter in New York at kporter17@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Matthew Monks, Michael Hytha

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