(Bloomberg) -- U.S. private equity firm ArcLight Capital Partners is among final bidders to partner with Kinder Morgan Inc. on its C$7.4 billion ($5.4 billion) Trans Mountain Expansion Project, according to people familiar with the matter.
Kinder Morgan has been pursuing both a joint venture and a potential initial public offering to finance the pipeline expansion project. While the Houston-based company filed a preliminary prospectus for the share sale with regulators last month as a fallback plan, it would prefer to find a partner on the deal, said the people, who asked not to be identified because the matter is private.
Talks with potential partners are ongoing and a deal with Boston-based ArcLight may not be reached, the people said. Brookfield Asset Management Inc., Canada's largest alternative-asset manager, and Australia's IFM Investors Pty Ltd. also progressed to the late rounds of negotiations, they said. IFM has since dropped out of the process, two of the people said.
Kinder Morgan is seeking to keep a majority stake in the Trans Mountain Expansion Project and has retained a C$4 billion credit facility to finance the construction, the people said. It's expected to split the remaining C$3.4 billion, as well as any debt commitments, with its joint venture partner, they said.
Several associated terminals and storage facilities in Canada and the U.S. have also been added to the package of assets, according to a regulatory filing.
Representatives for ArcLight, Brookfield, IFM and Kinder Morgan declined to comment.
The Trans Mountain Expansion Project is expected to provide western Canadian crude oil producers with an additional 590,000 barrels per day of shipping capacity from Alberta's tar sands to Canada's Pacific Coast, where it could be shipped to the western U.S., according to a regulatory filing. Construction is due to start in September and the project should be completed by December 2019.
The pipeline's capacity has been oversubscribed since 2010 and upon completion, 80 percent of its capacity will be under long-term contracts, Kinder Morgan said in the filing.
--With assistance from Meenal Vamburkar
To contact the reporters on this story: Scott Deveau in Toronto at sdeveau2@bloomberg.net, Matthew Monks in New York at mmonks1@bloomberg.net, Brett Foley in Melbourne at bfoley8@bloomberg.net.
To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha
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