Soaring power demand from data centers has put PE and infrastructure investors in the catbird seat for new returns, spurring more midstream M&A deals and development capital into LNG.

Surging demand for natural gas from data centers and industrial automation has spurred increased deal activity in the private equity and infrastructure fund-backed midstream gathering and liquified natural gas (LNG) export market.

The midstream energy market has been a safe haven for PE investors for years based on mature long-life assets connecting remote and highly productive oil and gas regions of Texas and the central US to the Gulf Coast region, where oil and gas are refined into products or transported abroad as LNG.

By contrast, the LNG market is at a more nascent state for PE investors, but has seen considerable interest from infrastructure investors to pension investors over the past couple of years.

Both the midstream and LNG markets stand to benefit materially from the deal-friendly and easier regulatory approval process of the current administration, dealmakers told PE Hub.

For a 2026 look at growth prospects and dealmaking in the LNG and midstream markets, PE Hub turned to seasoned dealmakers from Tailwater Capital, Mizuho Greenhill and Baker Botts.

The US utility market is now experiencing more than 3 percent compound annual growth rate demand specifically for new sources of power, a first for that industry after more than two decades of flat demand.

Energy major Shell recently forecast a 60 percent LNG demand increase by 2040. Meanwhile, global LNG exports grew by only two million tons in 2024, the lowest uptick in over a decade, due to constrained new LNG development.

With more than 170 million tons of new LNG supply to be made available by 2030, Shell reckons, the LNG market is on track to require 10 billion-15 billion cubic feet per day of new natural gas resources, a boon for equity investors in the coming years.

There’s never been a better time to acquire equity in long-term LNG projects.

Federal tailwinds support LNG

The current administration is moving fast in both energy subsectors, where it’s easy to permit projects.

“It’s the easiest export opportunity for the US – to turn on supply and play a key role in global trade,” Jason Downie, co-founder and managing partner of Tailwater Capital, said about the US exporting liquified gas products following the fracking revolution of 2009.

Under 15- to 20-year contracts, LNG is being shipped from US ports, primarily along the Gulf Coast to global power and utility companies abroad, with Downie citing Japan and South Korea as two crucial buyers of US natural gas.

In the coming year, Downie pointed to East Daley Analytics data citing demand for an incremental 10 billion-15 billion cubic feet per day of natural gas to supply LNG export.

“This year the LNG market saw growth in shipments to the Caribbean and Southeast Asia, displacing coal- and oil-fired generation as a cleaner energy transition source,” Clay Brett, partner and group head of Baker Botts’ energy PE group, told PE Hub. “Until 2024, investors were way behind in investing in the gas export market.”

The energy lawyer pointed to the participation of global strategics from the energy market as key co-investors alongside PE and infrastructure firms on many large-cap US midstream and LNG deals.

Baker Botts represented JERA, a Japanese utility, in its October agreement to acquire GEP Haynesville, a 500-million-cubic-feet-per-day natural gas acreage in Louisiana with midstream offtake capacity. JERA also signed a long-term LNG offtake agreement with NextDecade last May to purchase two million tons per annum of LNG from NextDecade’s Rio Grande LNG project in Texas. Other investors in that project include Global Infrastructure Partners, a part of BlackRock, GIC and Mubadala Investment Company.

“The importance of foreign strategics is a resurgent trend to center around gas basins, LNG and supply needs,” Brett said, citing “JERA as one of the first dominos” to fall over in a trend of strategic partnership LNG facilities backed by US companies, PE and infrastructure investors.

“When the world looks at energy development, the US is seen as the clear leader where most final investment decisions (FID) are being taken on new projects, creating an opportunity to invest in contracted assets for a return,” Ali Akbar, managing director of investment bank Mizuho Greenhill’s energy group, told PE Hub, pointing to Japanese and Middle East investors seeking to invest in energy projects.

Deal opportunities

Increased demand for gas has created fertile ground for development joint venture deals, acquisitions and asset sales, with larger deals prevalent in the vast Permian Basin of Texas connecting oil and gas resources to Gulf region ports and LNG export facilities.

2026 PE deal activity should continue to see multibillion-dollar asset transactions, such as Northwind Midstream, Akbar said, referencing the second-largest midstream deal of 2025 valued at $2.4 billion. Northwind, operator of gathering and processing facilities in Lea County, New Mexico, was sold in September by Five Point Infrastructure, a Houston-based energy PE and infrastructure fund, to listed midstream company MPLX.

“In 2025 bankers have been kept busy by LNG development, midstream asset sales to corporates and other large assets coming to market, like Colonial Pipeline,” Akbar told PE Hub. 

The largest mid- to downstream PE deal of the last year saw refined gas products pipeline system Colonial sold by KKR, Koch Industries, La Caisse, IFM Investors and Shell to Brookfield Infrastructure in a $9 billion transaction. Affiliate title Infrastructure Investor Deals covered the Colonial deal in an April deal brief. Greenhill, Jefferies and Morgan Stanley advised Brookfield on the Colonial deal.

Greenhill continues to be active in the market and is building a pipeline of transactions for early 2026. “The next few years will see more of the same – a new slate of PE-backed companies and large midstream assets will come up for sale, while a few more LNG projects will also get to FID,” Akbar said.

Energy investors

Tailwater, Stonepeak, GIP, Quantum Capital Group, EnCap Investments and First Infrastructure Capital are a few of the most-active midstream and LNG investors, industry sources told PE Hub.

“Alongside PE investors are sovereign wealth funds and global pension funds that can make direct investments or co-invest in PE-owned assets,” Downie said. “For exposure to pipeline assets, the appetite to make direct investments is quite high.”

Asked whether LPs continue to be arranged for renewable energy development, as well as conventional power or oil and gas, Baker Botts’ Brett said to date the energy market has continued to see equity funds specialize in renewable or conventional power or energy investment funds.

“From 2019 to 2021 you saw an investment exclusion trend, with funds diverted primarily to renewable power generation,” which Brett said is not too common anymore. “New LPs raised will be expressly natural gas-focused.”

Deal stats

• 2025 saw $55.5 billion of downstream energy deals get done, a slight uptick from $40 billion of deals done in 2023, the last high point over the last five years, according to Enverus, an energy data provider backed by Blackstone.
• Midstream deal activity clocked in at $24.2 billion in 2025, in line with 2023 at $25.2 billion worth of deals, reflecting a slower year for dealmakers based on federal changes from the incoming administration.
• Since 2023, midstream deals have averaged at 7x EBITDA multiples, with Permian and Appalachian seeing the highest valuations at 8x and the DJ-Rockies the lowest at 6x, according to Enverus.
• In the nascent LNG market, deal valuations have averaged at 13x EBITDA since 2020.

Editor’s note: For more PE Hub energy coverage, check out our recent power infrastructure feature and On the block story from that market.

For more on 2026 M&A outlook color, check out:

• Permira’s Philip Muelder: Valuations growing for A-grade services companies
• Baird’s Daina Spedding: 2026 tech multiples hinge on markets, interest rates
• Riverside Europe’s Karsten Langer: Pipeline starting to fill with platform prospects
• Hg co-CEO JB Brian: European tech M&A pricing looks ‘rational, not bubbly’