Kohlberg Kravis Roberts & Co. L.P. (KKR), the global investment firm, drives yet another step in the energy sector in Canada with plans to invest a minimum of $500 million and more in the coming five years, according to a Wall Street Journal report. The company proposes to open its first Canadian office in Calgary, the hub of oil reserves, next month, marking its sixth office in North America.
Notably, in Dec 2013, Kohlberg Kravis invested C$250 million in Torq Energy Logistics Ltd. to aid the capital plans and acquisition strategy of the latter. The company operates as a transport service provider for shipping crude oil by rail in western Canada.
In view of the significant capital needs of the oil and gas producers, Kohlberg Kravis’ investment objective is to meet their funding needs, thus ruling out direct acquisition of the companies. The company will explore prospects in upstream oil and gas production, midstream pipelines and related infrastructure and energy services businesses.
This comes as a strategic move by the company to capture the rising demand for private-equity financing in Canada’s energy sector and consequently enhancing its global footprint.
Though Canada possesses a flourishing energy sector, it has to combat a lack of public share offerings and foreign investments. However, this paved the way for private equity firms like Kohlberg Kravis to penetrate into the market. According to Canada’s Venture Capital and Private Equity Association, private-equity investments in oil and gas deals booked a significant $1.3 billion, marching ahead of other sectors during the first nine months of 2013.
Currently, Kohlberg Kravis enjoys significant exposure in Canada through its investments in Torq Energy Logistics and Westbrick Energy Ltd. The latest initiative seems promising for the company as it will further strengthen its long-term strategy of inorganic growth. Alongside, the company continues to benefit from its presence in varied sectors ranging from software to healthcare.
Kohlberg Kravis carries a Zacks Rank #3 (Hold). Some better-ranked investment managers include Artisan Partners Asset Management Inc. (APAM), Affiliated Managers Group Inc. (AMG) and Ameriprise Financial, Inc. (AMP). Artisan Partners carries a Zacks Rank #1 (Strong Buy), while both Affiliated Managers and Ameriprise Financial hold a Zacks Rank #2 (Buy).