EQT infra fund buys cooking oil company

Swedish private equity firm EQT has agreed to acquire a cooking oil distribution and waste management company from US private equity firms ABS and Parthenon. After the close of the acquisition, EQT’s €1.2bn infrastructure fund will be about 55% invested.

The €1.2 billion EQT Infrastructure Fund has agreed to acquire Restaurant Technologies Inc. (RTI), a Minnesota-based company that specialises in the distribution and disposal of frying oils, from US private equity firms Parthenon Capital Partners and ABS Capital Partners.

Financial details of the transaction were not disclosed.

Clearly, it's not a bridge, it's not an airport. But we feel that there is clearly a strong tie-in with the local community and a strong barrier to entry in terms of other competitors.

Glen Matsumoto

RTI manages the delivery and distribution of cooking oil to restaurant customers across the US through a network of 36 depots and a proprietary oil management system installed at the customers’ sites. The company also manages the collection of hazardous waste oils.

“In some ways you can look at this as an oil storage company even though it is cooking oil,” said Glen Matsumoto, partner at EQT and investment advisor to EQT Infrastructure.

“Clearly it’s not a bridge, it’s not an airport,” Matsumoto added. “But we feel that there is clearly a strong tie-in with the local community and a strong barrier to entry in terms of other competitors.”

RTI has over 17,000 customers, according to its website. Those customers include major US fast-food chains McDonald’s, Jack In the Box, Burger King, White Castle, KFC, and Applebee’s. Matsumoto said RTI’s typical contract length is about five to 10 years.

Cooking oil: fit for
infrastructure fund

The acquisition marks the second US investment for the EQT Infrastructure Fund, which is managed by Swedish private equity firm EQT. The fund, which closed 20 percent above target in November 2008, acquired a Michigan co-generation plant in 2009 from various groups, including funds managed by Rockland Capital Energy and GSO Capital Partners, and The Dow Chemical Company.

RTI is also not EQT Infrastructure’s first investment in edible oils. In 2010, the fund acquired Koole, a Rotterdam-based company that stores and transports cooking oils, fats and biofuels, according to the firm’s website. 

Comparing Koole to RTI, Matsumoto said Koole was more of an “upstream” oil investment, while RTI was more akin to a “downstream” oil operator.

In 2009, EQT Infrastructure acquired Kommunekemi, a hazardous waste management company in Denmark for an enterprise value of DK$260 million (€34.9 million; $50.7 million).

Matsumoto declined to discuss the size of RTI acquisition, but said it was “right in the middle” of previous EQT investments. Following the close of the RTI investment, the EQT Infrastructure fund will be about 55 percent invested, Matsumoto said.

The acquisition is subject to anti-trust approval. Closing is expected in mid-May.

EQT was advised on the deal by RBC Capital Markets (financial advisor) and Weil Gotshal and Manges (legal advisor). RTI was advised by William Blair (financial advisor) and Kirkland & Ellis and Dorsey & Whitney (legal advisors).