EQT attracts offers for Dutch oil storage firm Koole: Reuters

Swedish buyout group EQT has received offers for its Dutch oil storage group Koole Terminals valuing the business at more than 1 billion euros (US$1.1 billion), several people familiar with the deal said.

The investor last week collected more than 10 tentative bids, mainly from infrastructure investors, and will now pick several groups to submit final bids, the sources, who declined to be identified, said on Monday.

A consortium of Canadian pension fund Ontario Teachers’ Pension Plan and Wren House Infrastructure has made an offer, as has Borealis Infrastructure, the infrastructure investment of arm of pension fund Ontario Municipal Employees Retirement System (OMERS), bidding alongside First State Investments, they said.

The infrastructure arms of Goldman Sachs, JP Morgan and Macquarie are also in the running as are infrastructure-focused private equity groups like ArcLight Capital, they added.

Morgan Stanley is advising EQT on the sale, the sources said.

EQT, Morgan Stanley and the bidders declined to comment or were not immediately available for comment.

Since the collapse in oil prices in mid-2014, there has been strong demand for mid-stream storage and pipeline assets due to their stable valuations compared to oil exploration and production assets.

Investors speculating to sell oil at higher prices in the future have also increased demand for storage assets and made the business of storing oil highly profitable.

Koole is expected to post earnings before interest, taxes, depreciation and amortization of roughly 80-90 million euros this year, the sources said.

EQT is hoping to reap 14-15 times that in a potential deal, in line with the multiples paid in Vopak‘s sale of U.S. terminals to Kinder Morgan earlier this year and of ANZ Terminals to Macquarie last year.

EQT bought Koole in 2011 and has expanded the business with several bolt-on acquisitions such as terminals from Westway, NOVA and BP, which in January also announced the sale of another European oil storage asset.

Koole is held by EQT’s fully invested fund Infrastructure I, which has divested three companies this year – Denmark’s NORD, U.S.-based RTI and Sweden’s Swedegas.

Bankers are preparing debt packages of around 6.5 times core earnings to back infrastructure bidders, totalling up to 585 million euros of debt financing expected to be in the form of loans.

The loans could comprise a five-year facility and a three-year bridge facility, which will be taken out via the bond market. Any debt financing backing a private equity firm is likely to involve higher leveraged multiples.

By Ron Bousso and Arno Schuetze

(Additional reporting by Claire Ruckin and Freya Berry; Editing by Maria Sheahan and Susan Fenton)

(This story has been edited by Kirk Falconer, editor of PE Hub Canada)

Photo courtesy of Koole Terminals