TPG invests in natural gas services provider Valerus

TPG Capital announced Nov. 2 it will invest $500 million to purchase a majority stake in Houston-based Valerus Compression Services.

Valerus is a privately held provider of natural gas handling services, including natural gas compression, processing and treating. Fort Worth-based TPG Capital will invest the $500 million in the company’s debt and equity. Proceeds from the transaction will be used to provide capital for the company’s growth plans and to refinance the company’s existing debt. Management, employees, and other current investors will retain the remaining ownership.

Terms of the deal were not disclosed.

Chet Erwin will continue in his capacity as CEO. Dan F. Smith will become chairman at the time of the TPG investment.

Erwin said TPG’s investment will help the company as it grows both domestically and internationally.

“TPG’s involvement is a critical step in the evolution of the company. This partnership will support our domestic growth trajectory and help us take advantage of significant international opportunities,” Erwin said, in a press release.

TPG officials said Valerus will benefit from the growth in shale plays domestically and from international opportunities.

“Valerus is also uniquely positioned to help its customers capitalize upon increased natural gas production internationally. We look forward to partnering with the management team to help it pursue the company’s next phase of growth,” said Michael MacDougall, a partner at TPG Capital, in a press release.

J.P. Morgan and Tudor, Pickering, Holt & Co. Securities Inc. were financial advisers to TPG. Vinson & Elkins LLP served as legal counsel to TPG. Valerus was represented by Barclays Capital and King & Spalding LLP.