Master Limited Partnership Year in Review: 10 MLP Observations from 2013

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Last year’s surge in MLP activity likely will continue as investors grow increasingly familiar with the structure and its benefits.

2013 was a year of unprecedented growth in the number of publicly traded MLPs, as well as the level of both MLP capital markets and M&A activity. Some of this activity may be indicative of trends among MLPs that can be expected to continue in 2014. The following 10 observations may be of particular significance for principals, investors and others involved in the MLP sector:

1. The IPO market is strong. A record 21 MLPs completed initial public offerings (IPOs) in 2013 (with over 110 MLPs currently trading), and at least 30 other entities are contemplating an MLP IPO as of January 2014.

2. IPOs are getting bigger. The average proceeds raised in MLP IPOs in 2013 was $392 million, up 15 percent from $340 million in 2012. This increase perhaps reflects the growing appetite for MLPs among institutional investors as well as appetite for the larger asset sizes that sponsors are willing to contribute to their MLP vehicles.

3. IPO yields are coming down. Five of the six lowest-ever MLP IPO yields occurred during 2013, including two MLPs pricing their IPOs at a 3.70 percent initial yield, as investors are increasingly attracted to the combination of yield and return MLPs have recently offered.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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