Warburg Pincus picks $2.25bn Montana Renewables as latest energy transition investment

Global private equity firm Warburg Pincus has agreed to make a $250m investment in renewable fuel project Montana Renewables. The transaction values MRL at $2.25bn.

Based in Great Falls, Montana, MRL, a subsidiary of specialty branded products company Calumet, is modifying existing assets to process waste feedstocks, such as cooking oil, distillers corn oil, and tallow and seed oils to produce low-emission alternatives for fossil fuel products, such as renewable hydrogen, renewable diesel (RD), and sustainable aviation fuel (SAF). The company estimates that its renewable fuel will achieve a 64% carbon intensity reduction compared to conventional fuel.

The plant is expected to begin renewable feedstock processing in September 2022.

Todd Borgmann, CEO of Calumet, said: “Montana Renewables is now fully capitalized with a healthy balance sheet as we approach startup in the near future and the identified organic growth opportunities shortly thereafter.”

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In addition to Warburg Pincus’ investment, Calumet also announced that commercial finance and leasing company Stonebriar Commercial Finance has invested an additional $350m through two sale and leaseback contracts on top of an existing $50m commitment to MRL.

Alongside the new investments, a $300m convertible investment from alternative asset investor Oaktree in MRL has been retired.

Bruce Fleming, EVP Montana Renewables and Corporate Development, said: “This investment will accelerate our mission to quickly produce low-emission alternatives that directly replace fossil fuel products. We are pleased to partner with Warburg Pincus, a world class institutional investor, as well as to extend our longstanding multi-site relationship with Stonebriar. We would also like to extend our gratitude to Oaktree for their initial investment in MRL.”

In connection with the new investment, Warburg Pincus will have a representative on MRL’s 4-member board of managers.

Roy Ben-Dor, Managing Director, Warburg Pincus, said: “Understanding ways to economically reduce our carbon footprint in the immediate term is incredibly important. As the world recognizes a sustainability responsibility and as demand for low-emission fuels increases, MRL’s ability to produce RD and SAF quickly and efficiently will result in immediate carbon reductions.”

Source: ESG Today

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