Global private equity firm Warburg Pincus has agreed to make a $250 million investment in renewable fuel project Montana Renewables LLC (MRL). The transaction values MRL at $2.25 billion.
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.”
In addition to Warburg Pincus’ investment, Calumet also announced that commercial finance and leasing company Stonebriar Commercial Finance has invested an additional $350 million through two sale and leaseback contracts on top of an existing $50 million commitment to MRL.
Alongside the new investments, a $300 million 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.”