General Electric on Monday announced that it and Canada’s largest institutional investor, Caisse de depot et placement du Quebec, have agreed to buy the Southern Star Central natural gas pipeline system from AIG Highstar Capital for an estimated $362 million, plus the assumption of $476 million in debt and preferred stock.

Southern Star spans more than 6,000 miles in Kansas, Oklahoma, Missouri, Wyoming, Nebraska, Colorado and Texas, making it the largest gas transmission system based on mileage in the central United States. Its assets also include eight gas storage fields.

AIG Highstar Capital, a private-equity fund sponsored by American International Group, acquired 100% interest in Southern Star in 2002 from The Williams Cos., and GE’s Energy Financial Services unit acquired 2% of that equity in 2003. Upon the closing of the latest transaction, GE’s Energy Financial Services unit will hold a 60% economic interest in Southern Star, and Caisse de depot et placement du Quebec, which has $102.4 billion in net assets, will own 40%. Further financial details of the transaction were not disclosed Monday.

The sale is subject to the customary closing and regulatory approvals, expected within the third quarter of this year. Southern Star’s management will continue to operate and maintain the pipeline from its Owensboro, KY, headquarters, according to Stamford, CT-based General Electric.

This is the second time GE’s Energy Financial Services unit has invested in a gas pipeline with Montreal-based Caisse de depot et placement du Quebec. Last November, GE’s Energy Financial Services unit acquired from Enron Corp. 50% of CrossCountry Energy LLC, a 7,400-mile gas pipeline network extending from Florida to California. Caisse de depot et placement du Quebec then purchased part of the equity from GE’s Energy Financial Services.

“Our acquisition of Southern Star nearly doubles our pipeline assets, reinforces our infrastructure growth strategy and enables the pipeline’s current management and employees to continue to provide superior customer service,” said Dan Castagnola, managing director at GE Commercial Finance’s Energy Financial Services.

GE Energy Financial Services, an arm of GE Commercial Finance, currently has more than $10 billion in energy assets. It has signaled that it plans to double its energy portfolio over the next three years, according to a report in Monday’s Wall Street Journal.

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