Buyout firm KKR is to open a Calgary office focusing on the oil sands.Jeff McIntosh/The Canadian Press
KKR & Co., the New York-based buyout firm, is opening an office in Calgary next month to expand investments in the Canadian oil patch at a time when capital markets have been stingy to energy companies seeking to expand operations and make acquisitions.
The company is scouting for opportunities in all facets of Canadian energy, from production to infrastructure to oil-field services, said Brandon Freiman, who will be relocating from New York to head up the office.
Last month, the firm made a $250-million investment in a subsidiary of Torq Transloading Inc., an Alberta-based oil-by-rail terminal firm. Its other Canadian energy investment is Westbrick Energy Ltd., a private oil and gas producer operating in central Alberta's Pembina area.
KKR, led by financiers Henry Kravis and George Roberts, made its name in large leveraged buyouts to gain control of companies, but that will not be the main thrust of the new office, which will initially have two executives, said Mr. Freiman, a native Montrealer.
"Particularly on the energy side, we've been a lot more flexible over the last few years," said Mr. Freiman, KKR's director of energy and infrastructure. "What we really try to do is find great companies with great management teams and provide capital solutions. It could be an equity investment, it could be a joint venture, it could be drilling capital to go develop a resource."
The company looks for opportunities to invest $200-million or more, and there is no target for numbers of investments to make within specific time frames.
"We really don't run our business that way. We can go two years without doing anything if we're not finding opportunities, and then we can go one year and invest large amounts of capital in one or two investments, so it really is a wide range," he said.
The firm is joining a host of private equity players in Canadian energy, including New York-based Warburg Pincus LLC, which has made a total of $6-billion in investments in firms including MEG Energy Corp., Endurance Energy Ltd. and Osum Oil Sands Corp. Pension funds, such as Alberta Investment Management Corp., have also been active private equity investors.
Mr. Freiman said the sluggish market for energy merger and acquisition deals and public equity financing in Canada makes for opportunities for firms such as KKR, though he stressed it is intent on making investments for years to come.
"This isn't a short-term commitment on our part, so we're not basing this off of where the capital markets are today. But we definitely think that there's a need for private capital in the market today," he said.
Jeffrey Jones