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

TORONTO/NEW YORK 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 talks with the three pension funds were still ongoing.

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 its financing efforts for the massive project despite facing significant opposition from various 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 for the project and the bank is expected to run a so-called “dual-track” process. Apart from a potential IPO, Kinder Morgan is also considering a sale of a 50 percent stake in Trans Mountain by creating a joint venture. The formal process to attract joint 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.  

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.

Kinder Morgan has owned the pipeline since 2005 when it bought Terasen Inc. The expansion project will make Trans Mountain one of the biggest pipelines in North America. For the company, it would almost triple the pipeline’s capacity, allowing it to transport 890,000 barrels of oil per day.

Trans Mountain has been operating since 1953. Most of the crude, which is produced in Alberta, is shipped to British Columbia’s Pacific Coast, with some volumes diverted south of the border to Washington State.

(Reporting by John Tilak in Toronto, David French in New York; additional reporting by Nia Williams in Calgary; Editing by Denny Thomas and David Gregorio)