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Biffa set for £1bn stock exchange float

2000 Biffa Municipal vehicle

Biffa has announced its intention to float on the stock exchange in October in a move which City experts say would value the company at £1bn and provide an additional £270m in cash for expansion.

Biffa has completed 20 acquisitions since December 2013 for a total consideration of £53.4m, including Shanks’ UK solid waste business and Cory Environmental Municipal Services.

In March, the company reported that revenue had increased by 5.6% on the previous year to £927.5m while operating profit rose by 27.3% to £62.5m.

At the time, MRW reported that Biffa had ditched plans for a sell-off, having had interested from US and Chinese investors.

The new announcement anticipates that the UK waste market will grow at an annual 5% to £18.5bn by 2020, driven by population growth, further regulation around waste collections and treatment and an increasingly complex supply chain.

An official statement says Biffa’s executive management team has 137 years of waste management experience between them, with deep industry knowledge.

“Management are undertaking various initiatives to drive organic growth and improvements to margins across all four divisions, with a focus on price management, churn reduction and a programme to modernise IT systems. New service offerings are also planned … while continued focus on reducing the cost of waste disposal, combined with enhancing waste transfer station efficiencies, will contribute to further margin expansion.”

Ian Wakelin, Biffa chief executive, said it was an exciting time for the 104-year-old company.

“We believe there are multiple levers for continued organic growth and margin expansion in a market underpinned by structural growth drivers which favour Biffa’s service-oriented business model. Moreover, we operate in a fragmented market providing opportunities for further highly synergistic in-fill acquisitions.

“We are successfully implementing a three-pronged growth strategy, centred on growing our market presence, broadening our range of services to meet our customers’ complex needs and driving efficiencies across the business.”

Steve Marshall, Biffa chairman, said: “The prize is to further enhance the group’s leading market positions and build significant value for shareholders. We start from a strong base with a robust and resilient business model centred on a well-invested and integrated waste management platform.”

Biffa said efforts to hit the 50% household recycling rate by 2020, currently stalled at around 44%, may further increase the company’s control of separate waste streams and provide the opportunity for further investment.

It also said it was well positioned to invest in energy-from-waste infrastructure because of its high levels of contracted waste.

The company employs more than 7,000 people and manages more than six million tonnes of waste annually.

 

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