Kinder Morgan Inc. agreed to acquire a renewable natural gas developer on July 16, marking the first acquisition by Kinder Morgan’s energy transition ventures group since its launch earlier this year.
“This is a great day in the young history of Kinder Morgan Energy Transition Ventures (ETV),” commented ETV President Jesse Arenivas in a company release.
In the $310 million acquisition, Kinder Morgan will acquire Kinetrex Energy from an affiliate of Parallel49 Equity. Based in Indianapolis, Kinetrex is the leading supplier of LNG in the Midwest and a rapidly growing player in producing and supplying renewable natural gas under long-term contracts to transportation service providers, the release said.
“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,” Arenivas continued in the statement. “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.”
Key members of Kinetrex’s management team, including Kinetrex President and CEO Aaron Johnson, will be joining Kinder Morgan as part of the acquisition to pursue new projects that expand its renewable natural gas platform.
“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,” Johnson commented in the release.
Founded in 2013, Kinetrex is a turn-key provider of environmentally friendly renewable natural gas and LNG solutions to customers in the transportation, industrial, agricultural, utility and power industries with a commitment to developing solutions that lower the cost of business while maintaining a focus on environmental stewardship.
“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,” he added.
Kinetrex portfolio currently includes a 50% interest in the largest renewable natural gas facility in Indiana plus signed commercial agreements to begin construction on three additional landfill-based renewable natural gas facilities, resulting in total annual renewable natural gas production from the four sites of over 4 Bcf.
As the three new renewable natural gas facilities become operational over the next 18 months, Kinder Morgan said it expects the investment made through its acquisition Kinetrex to accretive to its shareholders with the purchase price and additional development capex representing less than six times expected 2023 EBITDA, according to its release.
The acquisition of Kinetrex by Kinder Morgan requires regulatory approval under Hart-Scott-Rodino and is expected to close third-quarter 2021. J.P. Morgan Securities LLC is exclusive financial adviser to Kinetrex Energy in connection with the transaction.
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