Four years ago, Morgan Stanley Infrastructure Partners (MSIP) walked away from buying Epic Energy. They'd been named preferred bidder in a 2022 auction for the gas pipeline owner, but couldn't agree on price with seller QIC and the deal fell through. This week, they both came back to the table and got it done, with MSIP agreeing to pay $1 billion for the business, which owns the 1,150-kilometre Moomba to Adelaide pipeline plus a 154-megawatt wind, solar and storage portfolio.
Four years is a long time for a valuation gap to close, and the reason it finally did comes down to data centres. MSIP's thesis this time is built around the explosive growth in electricity demand they're driving. That demand is expected to keep gas-fired power plants relevant in the grid for far longer than a renewables-only future would suggest, since gas can fill the gaps solar and wind can't cover on their own. A 57-year-old pipeline in South Australia has effectively become a bet on AI infrastructure needing reliable backup power for years to come.
It's not an isolated bet either. Epic Energy is the third gas pipeline deal in Australia and New Zealand in the past 12 months, following Brookfield's purchase of a majority stake in Clarus for NZ$2 billion and Stonepeak's acquisition of Allgas, the Queensland gas network serving around 120,000 households and businesses from Brisbane to northern New South Wales. Infrastructure funds are converging on the same idea at the same time, which either means they're onto something real about gas's staying power, or that everyone's crowding into the same trade before the data centre boom's energy assumptions get tested.
The deal still needs sign-off from the Foreign Investment Review Board and the ACCC. If the deal does, it's the third pipeline deal to get the green light in just twelve months, another sign gas infrastructure is back in favour with regulators and investors alike.
