Caliche Development Partners II Announces its First Acquisitions Following $268 Million Capital Commitment from Orion Infrastructure Capital and GCM Grosvenor

Rhea-AI Summary

Caliche Development Partners II, in partnership with Orion Infrastructure Capital and GCM Grosvenor, announced the acquisition of Golden Triangle Storage and plans for Central Valley Gas Storage. This $186 million investment aims to enhance underground storage capabilities in North America, supporting the transition to lower-carbon energy solutions. The Golden Triangle Storage deal closed on November 18, 2022, with the Central Valley acquisition pending regulatory approval in 2023. The partnership underscores the growing demand for natural gas storage amidst increasing reliance on renewable energy sources.

Positive

• Completed acquisition of Golden Triangle Storage enhances Caliche's portfolio.
• Anticipated acquisition of Central Valley Gas Storage aligns with growing demand for energy storage.
• Investment of $186 million signifies strong financial backing from OIC and GCM Grosvenor.

Negative

• Central Valley Gas Storage acquisition is dependent on state regulatory approvals, posing potential delays.

— Caliche's Underground Storage Platform to Support Energy Security and Transition —

— Partnership Closes First Acquisition of Golden Triangle Storage
and Announces Proposed Acquisition of Central Valley Gas Storage —

HOUSTON , Nov. 29, 2022 /PRNewswire/ -- Caliche Development Partners II (Caliche or Caliche II), Orion Infrastructure Capital (OIC), and GCM Grosvenor (Nasdaq: GCMG) today announced their partnership targeting underground storage and sequestration assets in North America.  The capital commitments represent OIC's second investment with the Caliche management team, and Caliche's first with OIC's frequent investment partner GCM Grosvenor, which invested client capital.  Both firms bring extensive experience in infrastructure investing to Caliche's next iteration, which will target underground assets supporting North America's transition to lower-carbon forms of energy.

The partnership's initial acquisition of Golden Triangle Storage, Inc. (GTS), together with the anticipated acquisition of Central Valley Gas Storage (CVGS), from Southern Company (NYSE: SO) affiliates, targets two regions with increasing demand for storage to support variable power loads, natural gas liquefaction, and high penetrations of renewable resources.  Acquisition amounts funded and/or anticipated to be funded by OIC, GCM Grosvenor, and Caliche management collectively total $186 million, which represents the aggregate purchase price of both GTS and CVGS, plus working capital and other adjustments. Caliche expects, with support from OIC and GCM Grosvenor, to explore and assess additional growth related to these assets and in these regions.  The GTS transaction closed on November 18, 2022, and the CVGS purchase, which requires state regulatory approvals, is expected to close in 2023.

"We are thrilled to partner with the Caliche team again and with GCM Grosvenor to build off the success of Caliche I," said Ethan Shoemaker, Investment Partner and Head of Infra Credit at OIC.  "GTS and CVGS are both premier storage assets and provide critical infrastructure for reliability in their respective markets.  We look forward to supporting Caliche II's continued growth as we expand the platform for other customers and into new products."

"We believe the investment opportunity for underground storage is robust in light of market dynamics and ongoing energy transition initiatives across the globe," said Matthew Rinklin, Managing Director at GCM Grosvenor. "The Caliche team has a proven track record of developing critical storage infrastructure for a range of customers across fuel types, and we look forward to growing their platform alongside our partners at OIC."

Caliche welcomes GTS and CVGS employees to its culture of providing safe and environmentally conscious underground storage services.  The Caliche team has a proven history of operating on the Spindletop salt dome, where GTS is located, and will leverage its expertise from its prior storage business—Coastal Caverns—for the success of both facilities.  Under the Caliche team's stewardship, Coastal Caverns operated with a TIRR of zero (0), an industry leading environmental record.  The team's decision-making hierarchy of "Safety, Asset Integrity, Stakeholder Stewardship and On-Demand Deliverability" comes from a combined 65 years of collective underground storage experience, with products including NGLs, oil, helium and natural gas.  Underground natural gas storage provides unparalleled flexibility for the entry of renewable generation resources into power grids, support for LNG exports to Europe and Asia, and ultimately provides the asset base and knowledge to move to carbon-neutral forms of generation.  The Caliche team previously developed North America's first helium storage salt cavern and is committed to now applying the team's decades of experience working together to the upcoming challenges of storing helium, hydrogen and sequestered CO2.

"Natural gas storage will continue to play an important role in our energy mix while providing the assets and knowledge to storing helium, hydrogen and CO2 in similar formations," said Dave Marchese, CEO of Caliche II. "The support of our repeat and new capital partners combined with the location of these two acquisitions, and their exceptional operational teams, provide Caliche a platform to significantly impact the energy transition on the U.S. Gulf and West Coasts." 

About Caliche Development Partners II
Caliche Development Partners II is a Houston, Texas-based company focused on the acquisition, development, construction, ownership, and operation of subsurface natural gas and industrial gas storage assets, as well as carbon sequestration in North America.  The Caliche management team previously developed and sold the Coastal Caverns site on the historic Spindletop salt dome.  GTS and CVGS, the acquisition targets, are located in Jefferson County, Texas and Colusa County, California, respectively.  

Caliche is committed to leading infrastructure development companies in sustainability.  Specifically, it is leveraging its expertise and relationships with large-scale emitters to spur the global energy transition from coal via the optimization of existing natural gas assets, hydrogen infrastructure and new carbon capture operations.  The company supports new energy transition legislation and sits on the Carbon Neutral Coalition's Advisory Board.  For more information, please visit www.CalicheStorage.com.

About Orion Infrastructure Capital (OIC)
With approximately $3 billion in assets under management, OIC invests in North America and select international markets. OIC's unique partnership approach – for entrepreneurs, by entrepreneurs – cultivates creative credit, equity, and growth capital solutions to help middle market businesses scale and deploy sustainable infrastructure. OIC's target investment sectors include energy efficiency, digital infrastructure, social infrastructure, sustainable power generation, renewable fuels, waste & recycling, water, transportation, and agriculture. OIC was founded in 2015 by a team of energy and sustainability veterans, successful infrastructure investors, and former asset owners and industry operators. Across OIC's platform is a team of 36 professionals based in New York, Houston and London. For more information, please visit www.OIC.com.

About GCM Grosvenor
GCM Grosvenor (Nasdaq: GCMG) is a global alternative asset management solutions provider with approximately $73 billion in assets under management across private equity, infrastructure, real estate, credit, and absolute return investment strategies. The firm has specialized in alternatives for more than 50 years and is dedicated to delivering value for clients by leveraging its cross-asset class and flexible investment platform.

GCM Grosvenor's experienced team of approximately 530 professionals serves a global client base of institutional and high net worth investors. The firm is headquartered in Chicago, with offices in New York, Toronto, London, Frankfurt, Tokyo, Hong Kong, and Seoul. For more information, visit: www.gcmgrosvenor.com.

MEDIA CONTACTS:

Caliche Development Partners II
Emily Walsh
ECW Communications
emily@ecwcommunications.com
646-489-9471

Orion Infrastructure Capital
Reyno Norval
reyno@oic.com
212-292-0345

GCM Grosvenor
Tom Johnson and Will Braun
Abernathy MacGregor
tbj@abmac.com / whb@abmac.com 
212-371-5999

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SOURCE Caliche Development Partners, LLC

FAQ

What is the value of the acquisitions made by Caliche Development Partners II?

The total investment for the acquisitions of Golden Triangle Storage and Central Valley Gas Storage amounts to $186 million.

When did Caliche close the acquisition of Golden Triangle Storage?

The acquisition of Golden Triangle Storage closed on November 18, 2022.

What is the target market for the newly acquired storage facilities by Caliche?

The acquisitions target underground storage in regions with increasing demand for natural gas and renewable energy support.

What is the expected timeline for the Central Valley Gas Storage acquisition?

The acquisition is expected to close in 2023, pending state regulatory approvals.

How do the acquisitions impact GCM Grosvenor's investment strategy?

The acquisitions align with GCM Grosvenor's focus on energy infrastructure and sustainability initiatives.