Beijing Enterprises to buy Germany's EEW from EQT for $1.6b

It is said to be the largest direct investment by a Chinese company in Germany, topping the EUR925 million KraussMaffei deal struck last month between Onex Corp. and a consortium comprising China National Chemical Corporation (ChemChina), Guoxin International Investment Corp. and AGIC Capital.

EEW is active in Germany, Luxembourg and the Netherlands, employing more than 1,000 people across 18 plants that convert waste into energy for electricity, district heating and process steam for industrial use. It has an installed waste capacity of 4.7 million tons and has produced a total of 6 terrawatt hours of energy. Sales came to EUR539 million in 2014. BEHL said that net profit was EUR15.1 million in 2014 and EUR65.6 million in 2015.

EQT Infrastructure II - a EUR1.93 billion fund that targets infrastructure businesses in parts of Europe and North America - acquired a 51% stake in EEW from Eon in March 2013, paying about EUR1 billion. Eon was selling off assets to reduce its debt load. It sold the remaining 49% to EQT in April 2015 as part of a group restructuring program. At the time, EEW reportedly had an enterprise value of around EUR1.3 billion.

The private equity firm said in a statement that it had supported significant growth in EEW through organic expansion and strategic acquisitions. Matthias Fackler, a partner at EQT, noted that a new management team and industrial board were appointed, while the company's customer base was broadened and improvements were made to its operational efficiency.

BEHL, which is controlled by the Beijing municipal government and is listed in Hong Kong, said in a filing that the acquisition represents an opportunity to introduce energy-from-waste technologies and management expertise to the China market. The company also plans to bring strategic investors into EEW, although it will remain the majority shareholder.

BEHL's interests span gas, water treatment, solid waste treatment and beer. This is not the first time it has acquired assets from private equity. In late 2014, it bought GSE Investment Corporation from MBK Partners and Hudson Clean Energy Partners.

The Chinese government has identified the construction of waste-to-energy plants as a priority. Last year, Beijing Capital Group, which operates wastewater treatment, water construction and real estate businesses in China, bought Singapore-based ECO Industrial Environmental Engineering from Navis Capital Partners. While the deal was in part driven by a desire to expand overseas, the growing waste management needs of China's cities were also a factor.

Chinese investment in Germany has focused on technology and manufacturing. In 2012 CITIC Private Equity helped Chinese construction equipment manufacturer Sany Heavy Industry to acquire concrete pump maker Putzmeister Holding, with CITIC retaining a minority stake. Later that year, Weichai Power, an automotive and equipment manufacturer owned by Shandong Heavy Industry, invested EUR738 million in Kion, a forklift truck maker backed by KKR and Goldman Sachs.

AGIC, which participated in the KraussMaffei deal, was set up to focus on investments in the Mittelstand - small and mid-size companies in Germany, Switzerland and Austria - in the technology and manufacturing sectors. The goal is to connect these companies with industrial producers in China that can use the technology to improve their operational efficiency.

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• Topics
• Greater China
• Cleantech
• Trade sale
• Europe
• EQT Partners
• China
• Cleantech
• Exit
• Trade sale
• Europe