Energy infrastructure company Kinder Morgan Inc. (KMI) has agreed to acquire Indianapolis-based Kinetrex Energy from an affiliate of Parallel49 Equity.
Kinetrex is a supplier of liquefied natural gas in the Midwest, as well as a rapidly growing producer and supplier of renewable natural gas (RNG) under long-term contracts to transportation service providers. Kinetrex has a 50% interest in the largest RNG facility in Indiana, as well as signed commercial agreements to begin construction on three additional landfill-based RNG facilities. Once the new sites are operational next year, total annual RNG production from the four sites is estimated to total over 4 billion cubic feet.
“This is a great day in the young history of Kinder Morgan Energy Transition Ventures (ETV),” says ETV’s president, Jesse Arenivas. “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.”
“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,” notes KMI’s president and CEO, Aaron Johnson. “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.”
KMI owns an interest in or operates approximately 83,000 miles of pipelines, 144 terminals and 700 billion cubic feet of working natural gas storage capacity.
As part of the acquisition, key members of Kinetrex’s management team will be joining KMI. After close, Johnson will continue with KMI as president of RNG, reporting 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 expected 2023 EBITDA.
J.P. Morgan Securities LLC acted as exclusive financial advisor to Kinetrex Energy in connection with the transaction. The acquisition, expected to close this quarter, requires regulatory approval under Hart-Scott-Rodino.