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The shares closed 3.5 percent higher than the IPO price of $30 at $31.05 on the New York Stock Exchange after the company conducted the largest U.S. energy-related IPO since 1998.

The IPO was seen as a means for Kinder's private equity partners to monetize their investment and an opportunity for investors to gain access to the company's track record of steady cash flows and its vast network of pipelines spanning the United States and stretching for 2,500 miles in Canada.

"It's a yield play," Nick Einhorn, research analyst at Renaissance Capital, said of investor appetite. "It's a high-quality company that still has pretty decent growth."

Backed by private equity investors including Carlyle Group CYL.UL and Goldman Sachs Group Inc's (GS.N) buyout fund, Kinder Morgan upsized its IPO as shareholders sold a 13.5 percent stake in the company.

Houston-based Kinder Morgan raised $2.86 billion on Thursday in an IPO valuing the firm at more than $21 billion.

INSTITUTIONAL INVESTOR APPEAL

Kinder Morgan's offering represented interest in its master limited partnership (MLP), Kinder Morgan Energy Partners LP (KMP.N), which holds most of the company's assets.

Historically, institutional investors have shunned buying into partnerships because of tax complications. But this offering was a way for them to add pipeline and storage assets to their portfolios as MLPs have low tax liability, which also provides them with a lower cost of capital.

"It's a blue-chip from day one," said Francis Gaskins, president of IPODesktop.com. "It's a blue chip that institutions have no problem owning."

The underlying MLP has forecast an increase of about 4.5 percent in its dividend yield this year, which would mean an even bigger yield growth for Kinder Morgan Inc investors, Einhorn said.

The IPO price of $30 per share implied a yield of 3.9 percent based on $1.16 per share in dividends Kinder Morgan said in the filing it would pay annually if it was public for all of 2011, analysts said.

Kinder Morgan's private equity investors and management will retain control of nearly 90 percent of the company.

Chief Executive Officer Rich Kinder, who led the 2007 buyout of the company, is keeping his entire 30.6 percent stake, which leaves him heavily invested in the company's future in contrast with typical private-equity investors' exits from a bought-out company through an IPO.

The CEO previously was president of energy company Enron Corp but left in 1996 -- years before it was enmeshed in an accounting scandal and went bankrupt.