In the United States (US), Kinder Morgan, Inc. (KMI) one of the largest energy infrastructure companies in North America has announced it has agreed to acquire Indianapolis-based Kinetrex Energy from an affiliate of Parallel49 Equity. Kinetrex is the leading supplier of liquefied natural gas (LNG) in the Midwest and a rapidly growing player in producing and supplying renewable natural gas (RNG) under long-term contracts with transportation service providers.
According to a statement, Kinetrex has a 50 percent interest in the largest RNG facility in Indiana (IN) as well as signed commercial agreements to begin construction on three additional landfill-based RNG facilities.
Once operational next year, total annual RNG production from the four sites is estimated to be over four billion cubic feet. Kinetrex’s unique full-service platform provides outstanding value for its customers and host landfills.
As we looked for the best partner to help grow our presence in renewable natural gas, Kinder Morgan’s Energy Transition Ventures emerged as the clear choice. KMI’s project management expertise, extensive pipeline network, and broad customer relationships will undoubtedly help us realize the vision we had in founding Kinetrex eight years ago: to provide holistic solutions for customers seeking to meet emission reduction targets, said Kinetrex President and CEO Aaron Johnson.
The US$310 million acquisition transaction requires regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act and is expected to close in the third quarter of 2021.
This is a great day in the young history of Kinder Morgan Energy Transition Ventures (ETV). We have been focused on RNG due to its potential to grow rapidly in the near term and deliver attractive returns, with landfills providing a low cost, predictable and long-term feedstock. The team at Kinetrex has developed an outstanding business model and platform for future growth in a fragmented market, and we are excited to welcome them to Kinder Morgan, said ETV President Jesse Arenivas.
Key members of Kinetrex’s management team will be joining KMI as part of the acquisition to pursue new projects that expand their successful RNG platform. After the close, Johnson will continue with KMI as President of Renewable Natural Gas and will report to Arenivas.
KMI expects the investment to be accretive to its shareholders as the three RNG facilities become operational over the next 18 months, with the purchase price and additional development capital expenditures representing less than six times the expected 2023 EBITDA.
J.P. Morgan Securities LLC acted as exclusive financial advisor to Kinetrex Energy in connection with the transaction.
