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In golf, you don't want to be in the "tall grass." So far in 2019, the same rule applies to private equity's energy sector investments.

Driving the news: The Blackstone Group earlier this year invested $3.3 billion for a 44% stake in Tallgrass Energy, a Kansas-based midstream energy infrastructure company. But the stock has tanked since then, with Blackstone now opting to double down by offering to take over the entire company.

Tallgrass was the first investment out of Blackstone's debut infrastructure fund, which reportedly has secured over $12 billion in commitments (including a big slug from Saudi Arabia).

  • Tallgrass stock was at $24.18 just before the announcement. Yesterday it closed at $13.35 per share.
  • Reasons for the slide include missing Q2 earnings estimates on both the top and bottom lines, plus some investor concerns about potential conflicts related to Blackstone's original deal (in which it bought the GP, thus effectively controlling the LP in which it has a minority stake).
  • But, more broadly, it's been caught up in an overall energy sector slump. Even oil majors like Exxon Mobil and Royal Dutch Shell are down for the year.

Rather than cutting ties with Tallgrass, Blackstone is offering to take the company private for $19.50 per share. Tallgrass hasn't yet accepted the bid, saying it needs to first form an independent committee for consideration (Blackstone currently controls its board).

    • This isn't unique. Private equity firms ArcLight and Brookfield both offered to take over similar companies in which they had minority stakes via master limited partnership arrangements.

The bottom line: Blackstone bought into a bear market for energy stocks, despite the White House's much hyped deregulation. But rather than glumly head back into the clubhouse, it's pulling out another club, believing that its luck will improve if given enough time. Just like every amateur golfer ever.

Go deeper

Biden will reverse Trump's attempt to lift COVID related travel restrictions

Photo: Tasos Katopodis via Getty

The incoming Biden administration will reverse President Trump's last-minute order to lift COVID-19 related travel restrictions, Jen Psaki, the incoming White House press secretary, tweeted.

Why it matters: President Trump ordered entry bans lifted for travelers from the U.K., Ireland, Brazil and much of Europe to go into effect Jan. 26, but the Biden administration will "strengthen public health measures around international travel in order to further mitigate the spread of COVID-19," Jen Psaki said. Biden will be inaugurated on Wednesday, Jan. 20 and Trump will no longer be president by the time the order is set to go into effect.

Dominion sends cease and desist letter to My Pillow CEO Mike Lindell

Photo: Stephen Maturen/Getty Images

Dominion Voting Systems on Monday sent a cease and desist letter to My Pillow CEO Mike Lindell over his spread of misinformation related to the 2020 election.

Why it matters: Trump and several of his allies have pushed false conspiracy theories about the company, leading Dominion to take legal action. It's suing pro-Trump lawyer Sidney Powell for defamation and $1.3 billion in damages, and a Dominion employee has sued Trump himself, OANN and Newsmax.

Off the Rails

Episode 5: The secret CIA plan

Photo illustration: Aïda Amer, Sarah Grillo/Axios. Photo: Zach Gibson/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 5: Trump vs. Gina — The president becomes increasingly rash and devises a plan to tamper with the nation's intelligence command.

In his final weeks in office, after losing the election to Joe Biden, President Donald Trump embarked on a vengeful exit strategy that included a hasty and ill-thought-out plan to jam up CIA Director Gina Haspel by firing her top deputy and replacing him with a protege of Republican Congressman Devin Nunes.