The waste industry continues to attract private equity investors for premium waste industry assets, according to corporate finance advisor Catalyst Corporate Finance.
In its research identifying the top 50 fastest growing private businesses within the waste industry for the Chartered Institution for Wastes Management, CCF found private equity firms are backing the leaders in the sector.
The firm which hit the top spot was mobile phone recycling firm Eazyfone. With 172% growth over three years the firm was spotted by Anglo Dutch firm Frontiers Capital and now owns it. Reconomy, which is the second fastest growing waste firm, is backed by Englefield Capital, also an Anglo Dutch private equity investor. Furthermore, 20% of the top 50 firms were backed by private equity, which is now higher than in other lower growth sectors.
CCF partner Mark Wilson said: I think there will be a lot more private equity investment in the sector. Investors are looking for investment opportunities, which are partially underpinned by Government legislation. There are for example a number of specific fiscal incentives which are now materially important to waste companies and the landfill tax escalator continues to drive investment into newer waste segments. The implementation of feed-in tariff (FITs) this April and the carbon reduction commitments reporting requirements are further reasons why firms will want to invest in this sector.
Over 40 of the firms listed showed double digit growth. One of the reasons for this growth is that the industry is disaggregating across both the supply chain and across different waste streams. Industry giants are often too slow to capitalise on the change due to cash constraints, and as a result entrepreneurial businesses are moving in and private equity firms are helping these businesses to grow. Additionally, the waste industry is increasingly being linked to the energy sector.
The top spot went to a mobile phone recycler, which is one of the only businesses in the listing focused on consumers, Wilson commented. I think the reason for its success has been the expansion in peoples mobile phone usage and the regularity at which mobiles are being changed. Eazyfone has capitalised on this consumer trend and the possibilities associated with recycling. Additionally they are using internet based technology to interact with their customers, which is something that is relatively new to waste firms.
Top ten fastest growing firms
3 Community Waste
4 HW Martin Waste
5 J&A Young
6 Enpure Holdings
7 GSS Support Services
8 Choice Waste Management
9 Celtic Recycling
10 Riverdale Paper