Exclusive: Kinder Morgan starts talks with investors for $5.2 billion Canada pipeline project - sources

Fri Feb 17, 2017 1:57pm EST
 
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By John Tilak and David French

TORONTO/NEW YORK (Reuters) - Kinder Morgan Inc KMI.N has begun talks with institutional investors including major Canadian pension funds and private equity firms to raise capital for the C$6.8 billion ($5.2 billion) expansion of its Trans Mountain pipeline project, according to people familiar with the process.

Kinder Morgan has held discussions with Canada Pension Plan Investment Board, the Caisse de depot et placement du Quebec and Ontario Teachers' Pension Plan Board, three of the biggest Canadian pension funds, the people added. It was unclear whether these talks were continuing.

The biggest U.S. pipeline company, which has said its goals for 2017 include a joint venture or initial public offering of Trans Mountain, is stepping up financing efforts even though the massive project faces opposition from environmental and aboriginal groups. It won Canadian government approval late last year, and expects to start the expansion later in 2017 and complete it by 2019.

Kinder Morgan has hired Toronto Dominion Bank TD.TO as an adviser to help arrange financing, and the bank is expected to run a so-called "dual-track" process. Apart from a potential IPO, Kinder Morgan is also considering sale of a 50 percent stake in Trans Mountain by creating a joint venture. The formal process to attract venture partners is getting underway, the people said.

"We're confident in the interest from the investment community and we're continuing to move forward with all aspects of planning in order to begin construction in September 2017," said Ali Hounsell, spokeswoman for Kinder Morgan's Trans Mountain Expansion Project.  

The company will also tap sovereign wealth funds from the Middle East, the people said. Institutional investors are attracted to infrastructure assets because they tend to operate with long-term contracts and have stable cash flow.

CPPIB declined to comment. TD, the Caisse and Ontario Teachers did not immediately respond to requests for comment. Sources declined to be identified as the discussions are private.

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FILE PHOTO - The entrance for the Kinder Morgan Tank Farm is pictured in Burnaby, British Columbia, October 6, 2014. REUTERS/Ben Nelms