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There’s an appetite for investment

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

DateTargetCountryDescriptionInvestorConsideration £m
Sep-14Global Environmental Management ServicesSaudi ArabiaWaste ManagementJadwa Waste Management Opps Fund, Fajr Capital n/d
Aug-14Attero Recycling PvtIndiaWEEE RecyclingForum Synergies, Kalaari Capital Advisors, DFJ                10.0
Aug-14Enevo OyFinlandSensors in waste environmentsDraper Fisher Jurvetson                 4.8
Aug-14Clean Earth HoldingsUSAContaminated materialsCompass Diversified Holdings              144.3
Jul-14Wheelabrator Technologies IncUSAEnergy from wasteEnergy Capital Partners           1,143.6
Jul-14Waste & energy activities of VeoliaIsraelWaste ManagementOaktree Capital Management              198.8
Jul-14Liquid Environmental SolutionsUSANon-HazardousABS Capital Partners                18.4
Jun-14Eco EridaniaItalyWaste ManagementXenon Private Equity n/d
May-14Local operations of Waste Management, IncPuerto RicoWaste ManagementPost Capital Partners n/d
Mar-14LanzaTech New Zealand LtdNew ZealandEquipmentMitsui & Co, CICC Growth Capital, Siemens Ventures                36.3
Feb-14UAB EcoserviceLithuaniaWaste ManagementBaltCap Private Equity                10.0
Feb-14Teqcycle Solutions GmbHGermanyWEEE recyclingT-Mobile Venture Fund n/d
Jan-14AMCS Nominees LtdIrelandEquipmentHighland Capital Partners Europe                19.5
Jan-14Begemann Milieutechniek BVNether-landsMetal RecyclingPrivate 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

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