In my last Opinion column (MRW 5 July), I commented on how private equity (PE) investment in the UK has held up well despite the economic turmoil since 2008, attracting capital into the waste industry from mainstream funds.
To further underline the trend, last month LDC, which is arguably the UK’s most active mid-market investor, completed the secondary buyout of oil and environmental services business Adler and Allan, which has a strong waste management service line.
LDC said that part of the attraction of Adler and Allan was the opportunity that a resurgent industrial sector and economy would offer the business, which expects record revenues of £60m in the 2014 financial year, up on 2013’s £47.9m. The tight correlation between opinion waste industry performance and national economic performance has become a net-positive influencing factor in investment decisions.
Of course, the characteristics of individual businesses and management teams also determine attractive investments, but the macro environment still remains hugely important.
It is evident from our research and the work of our partners that PE investors are also becoming more positive about the prospects for the sector in their respective countries than they have been for many years.
Also last month, Global Environmental Management Services, a leading player in Saudi Arabia focused on the petrochemical sector, was acquired by Jadwa Waste Management Opportunities Fund and Fajr Capital, both wellknown PE investors in the region.
During the summer, Waste Management Inc, the largest waste player in the US, divested Wheelabrator to Energy Capital Partners for $1.94bn (£1.14bn). Wheelabrator owns or operates 17 energy- from-waste facilities processing more than 7.5 million tonnes of waste. EBITDA last year was $171m (excluding goodwill ($483m) and asset ($144m) impairment charges) on revenues of $845m, suggesting Energy Capital Partners paid more than 11 times EBITDA.
Other investments this year have included a range of well-known PE funds across different sectors such as Draper Fisher Jurvetson, Oaktree Capital Management and Post Capital Partners, who have been serial investors in the sector.
Of course, PE investments are made if an exit can be foreseen. Investments are typically held for no longer than five years, and a liquid exit market is important in attracting investors. The recent announcement from PE sponsors CVC and KKR that they have put Van Gansewinkel up for sale suggests the exit market is positive in as much as strategic buyers are expected to acquire the business. EQT Infrastructure has also put the Danish waste treatment company Nord up for sale.
We will see during the next few months if all this confidence is well founded.
Selected PE investments around the world
|Sep-14||Global Environmental Management Services||Saudi Arabia||Waste Management||Jadwa Waste Management Opps Fund, Fajr Capital||n/d|
|Aug-14||Attero Recycling Pvt||India||WEEE Recycling||Forum Synergies, Kalaari Capital Advisors, DFJ||10.0|
|Aug-14||Enevo Oy||Finland||Sensors in waste environments||Draper Fisher Jurvetson||4.8|
|Aug-14||Clean Earth Holdings||USA||Contaminated materials||Compass Diversified Holdings||144.3|
|Jul-14||Wheelabrator Technologies Inc||USA||Energy from waste||Energy Capital Partners||1,143.6|
|Jul-14||Waste & energy activities of Veolia||Israel||Waste Management||Oaktree Capital Management||198.8|
|Jul-14||Liquid Environmental Solutions||USA||Non-Hazardous||ABS Capital Partners||18.4|
|Jun-14||Eco Eridania||Italy||Waste Management||Xenon Private Equity||n/d|
|May-14||Local operations of Waste Management, Inc||Puerto Rico||Waste Management||Post Capital Partners||n/d|
|Mar-14||LanzaTech New Zealand Ltd||New Zealand||Equipment||Mitsui & Co, CICC Growth Capital, Siemens Ventures||36.3|
|Feb-14||UAB Ecoservice||Lithuania||Waste Management||BaltCap Private Equity||10.0|
|Feb-14||Teqcycle Solutions GmbH||Germany||WEEE recycling||T-Mobile Venture Fund||n/d|
|Jan-14||AMCS Nominees Ltd||Ireland||Equipment||Highland Capital Partners Europe||19.5|
|Jan-14||Begemann Milieutechniek BV||Nether-lands||Metal Recycling||Private Active Capital and E-Capital||n/d|
Source: Catalyst Corporate Finance - Global Waste Deal Database GWDD©
Mark Wilson is a partner and head of waste and renewables at Catalyst Corporate Finance