KKR & Co LP (NYSE: KKR) is set to acquire a stake in Torq Energy Logistics Ltd., an operator of transloading terminals in Canada, for C$250 million (U.S.$235 million).
Specifics of what percentage KKR agreed to buy of Torq remain undisclosed, but reports say the private equity firm now owns a majority of the Calgary-based target.
The transaction is expected to close in January.
KKR looks to fund privately-held Torq’s capital expenditure program, as well as allow it to implement an acquisition strategy. So far, Torq manages just six transloading terminals across Western Canada. The company transports crude oil from the well site to the rail car, a practice that has attracted criticism in recent months after the derailment and explosion of a tanker train that killed 47 people in a Quebec town in July 2013.
Torq Energy is an affiliate of midstream oil company Torq Transloading Inc., which announced in August plans to build a new $100 million crude-by-rail terminal. The site, set to be built in Kerrobert, Saskatchewan, will be able to load 168,000 barrels per day of oil.
The deal with KKR comes as more investors look to capitalize on energy producers seeking alternatives to pipelines as a means of transporting crude oil to U.S. refining markets. The purchase was also announced on the heels of major consolidation among logistics companies, namely those that cater to Canada’s energy industry.
Kenan Advantage Group, for example, acquired RTS-Westcan Group of Cos. in Novemebr. RTS-Westcan, headquartered in Edmonton, Canada, provides bulk transportation and logistics services, primarily hauling liquid and dry bulk commodities. (For more on the transportation industry, see “Logistics, Logistics, Logistics.”)