Tortoise Capital's Index Shakeup: EnLink Midstream's Removal and Its Impact

Tortoise Capital has announced a significant change to its indices, with EnLink Midstream, LLC (NYSE: ENLC) set to be removed from the Tortoise MLP Index (TMLP), the Tortoise North American Pipeline Index (TNAP), and the Tortoise Decarbonization Infrastructure Index (DCRBN). This move, effective at market open on January 31, 2025, comes as a result of ENLC's announced acquisition by ONEOK Inc. Let's delve into the implications of this change and what it means for investors.



The removal of EnLink Midstream from the Tortoise MLP Index will trigger a special rebalance, ensuring that no single issuer or affiliated MLP family exceeds 7.5% or 15% respectively. This rebalance will maintain the index's intended composition and weightings, adjusting the weights of the remaining constituents to reflect the index's methodology. In contrast, ENLC's weight in the Tortoise North American Pipeline Index and the Tortoise Decarbonization Infrastructure Index will be distributed pro-rata among the remaining index constituents.

ONEOK Inc.'s acquisition of EnLink Midstream has strategic implications for the midstream energy sector and the companies in the Tortoise MLP Index. With fewer companies left to buy and less competition for big M&A deals, investors will spread capital across the remaining names, supporting stock prices across the sector. This scarcity of remaining players also supports valuations, as investors seek exposure to the remaining midstream companies. The acquisition has made ONEOK the third-largest midstream company in North America by market capitalization, trailing only Enbridge and Enterprise Products Partners.



The removal of EnLink Midstream from the Tortoise MLP Index and the redistribution of its weight in the other indices will impact the performance and composition of these indices. Investors should closely monitor the changes in the index constituents and their respective weights to make informed decisions about their portfolios. As the midstream energy sector continues to evolve, the strategic implications of ONEOK's acquisition and the resulting index changes will become increasingly apparent.

In conclusion, Tortoise Capital's announcement of EnLink Midstream's removal from its indices highlights the dynamic nature of the midstream energy sector and the importance of staying informed about the strategic moves of key players. Investors should closely monitor the changes in the indices and the sector as a whole to make well-informed decisions about their portfolios. By understanding the implications of these changes, investors can better position themselves to capitalize on the opportunities that arise in this ever-evolving landscape.