First Reserve to sell oil terminal for $1.36bn

First Reserve plans to sell its majority stake in the Bahamas Oil Refining Company terminal to Buckeye Partners in a $1.36bn cash-and-equity deal expected to close in the first quarter.

First Reserve Corporation has agreed to sell its 80 percent stake in the Bahamas Oil Refining Company terminal for $1.36 billion to publicly traded Buckeye Partners, a Houston-based pipeline and energy specialist.

Energy-focused First Reserve will receive a combination of cash and equity. The deal would give First Reserve nearly 7 million shares in NYSE-listed Buckeye Partners worth roughly $400 million. Buckeye is expected to raise additional cash through the issuance of debt and the sale of shares to institutional investors.

The deal is expected to close in the first quarter, pending approval from local regulators.

The $1.36 billion sale seems likely to be a winner for First Reserve, which acquired its majority stake in the Bahamas oil terminal operation from the Petróleos de Venezuela group for $900 million in 2008 via its $7.8 billion Fund XI.  The 2008 acquisition also included a strategic co-investment by Netherland-based terminal operator Royal Vopak, which retains a 20 percent stake in the Freeport, Bahamas facility.

The December deal follows growing investor interest in global shipping hubs that provide bunker-fuel filling facilities for deepwater cargo liners. The Bahamas oil terminal, known as BORCO, is the fourth largest in the world, boasting a 21.6-million-barrel capacity. Buckeye plans to boost capacity to 30 million barrels.

Earlier this month, Buckeye Partners also purchased a smaller oil terminal in Puerto Rico from Royal Dutch Shell.

First Reserve, meanwhile, continues to invest capital raised in its fund XII, which has $9 billion under management. In October, the firm purchased a solar-power plant in Northern Italy from SunEdison for €276 million.