#USA #Midland #Dow Chemical #Macquarie Asset #Gulf Coast

Dow and Macquarie Asset Management Form New Partnership

In a significant move for infrastructure management, Dow (NYSE: DOW) has announced its partnership with Macquarie Asset Management to launch the Diamond Infrastructure Solutions initiative. This partnership is aimed at enhancing the operational efficiency and reliability of selected infrastructure assets along the U.S. Gulf Coast, specifically targeting five of Dow's manufacturing sites.

Partnership Overview

Under this newly formed partnership, a fund managed by Macquarie will acquire an initial 40% equity stake in selected Dow Gulf Coast infrastructure assets. What's more, the agreement includes an option for Macquarie to increase its stake to 49% within six months of the transaction's closing. This initial deal is set to bring in cash proceeds of around $2.4 billion for Dow, with the potential for total proceeds to climb up to approximately $3.0 billion if Macquarie opts for the full equity stake.

The major strategic objective of this partnership, named Diamond Infrastructure Solutions, is to leverage both Dow's operational competence and Macquarie's infrastructure expertise. By targeting new customers and improving access to Dow's U.S. Gulf Coast sites for third-party clients, the partnership seeks to create a mutually beneficial growth environment.

Financial Implications and Growth Potential

Dow is looking forward to harnessing the financial flexibility from this partnership to reinvest in higher-value growth opportunities within its portfolio. Jim Fitterling, the chair and CEO of Dow, stated, "This transaction further strengthens our financial flexibility and enables continued cash deployment towards the most attractive opportunities that will create long-term value for our stakeholders."

He highlighted that the collaboration with Macquarie aligns with Dow’s values and commitment to ensuring safe and reliable operations for industrial customers across the Gulf Coast.

Strategic Importance of Diamond Infrastructure Solutions

The Diamond Infrastructure Solutions venture will focus on various non-production assets, including power and steam production facilities, pipelines, environmental operations, and overall infrastructure at Dow's Texas and Louisiana sites. These enhancements will link Dow to major natural gas, NGL, and olefin hubs, ensuring it remains a key player in the infrastructure arena.

Macquarie Asset Management brings a wealth of experience to the table, particularly its focus on operational excellence in managing vital infrastructure projects. The firm has established credibility through its management of industrial parks, regulatory utilities, and infrastructure platforms, positioning it well to maximize the strategic potential of the Diamond initiative.

Ben Way, Macquarie's Global Head of Asset Management, commented on the significance of this collaboration. He noted, "As a long-term owner of essential infrastructure, we recognize the value that can be unlocked through the development of infrastructure platforms like Diamond Infrastructure Solutions."

Implications for the Future

This collaboration is a continuation of Dow's strategic efforts to streamline its operations, particularly following previous asset sales in North America. The formation of Diamond Infrastructure Solutions aligns with Dow’s ongoing commitment to maximizing the value of non-product producing assets and positions the company to better tackle the challenges of a rapidly changing industrial landscape.

In conclusion, the launch of Diamond Infrastructure Solutions not only illustrates the ambitious trajectory Dow and Macquarie Asset Management are on but also emphasizes their shared commitment to operational excellence and effective resource allocation. As they move forward with this initiative, they are set to redefine how infrastructure is managed in the Gulf Coast region, opening doors for further innovative collaborations in the future.