PE-owned Dutch waste company sells subsidiary to Cheung Kong Infrastructure

CKI and parent company Cheung Kong Holdings will each take a 35% stake in AVR Afvalverwerking, with Power Assets Holdings and the Li Ka Shing Foundation owning 20% and 10%, respectively. All these companies are ultimately controlled by Li Ka-Shing, Asia's wealthiest individual.

The equity commitment of each party will fall based on the amount of bank financing available for the transaction. The deal is subject to customary regulatory approvals and is expected to close in the third quarter of this year.

According to unquote", AVCJ's Europe-focused sister publication, a consortium led by KKR and CVC took control of AVR from the Municipality of Rotterdam in 2006 for an enterprise value o EUR1.4 billion. The following year, AVR acquired Van Gansewinkel in a deal estimated to be worth EUR800 million. The PE firms put in another EUR520 million into the company - known as Van Gansewinkel Groep - in 2009 as part of a restructuring effort.

CVC's portion of the consortium owns 38% of Van Gansewinkel Groep while the KKR group holds 33%.

AVR is the largest EfW player in the Netherlands with a 23% market share of the country's waste processing industry. It has a total permitted capacity of more than 1.8 million tons and the energy produced is delivered as steam and heat to neighboring industries and local district heating systems. The division has 434 employees. Annual turnover was EUR256 million in 2012, with EBITDA coming in at EUR108 million.

"The acquisition of AVR will see us investing in a leading waste management company in Europe, possessing the largest EfW plant capacity in the continent. With waste treatment being an imminent issue in most places around the world, we see good growth potential in this business," H.L. Kam, group managing director of CKI, said in a statement.

In January, CKI agreed to buy EnviroWaste, New Zealand's second-largest waste services business, from Ironbridge Capital for NZ$490 million ($412 million).

The Hong Kong group's European portfolio includes extensive gas and water assets in the UK. It was the lead player in consortia - of similar composition to that involved in the AVR deal - that bought Northumbrian Water in 2011 for GBP2.4 billion in 2011 and Wales & West Utilities last year for GBP645 million.

Asian investors are increasingly drawn to the diversification and yields offered by European infrastructure, particularly regulated assets - such as water - where the prices are locked for years at a time. However, this demand has led to prices being bid up and the expectation is that returns will be pushed down.

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• Topics
• Buyouts
• Exits
• Europe
• Greater China
• Infrastructure
• Infrastructure
• KKR
• CVC Capital Partners
• Exit
• Europe
• energy
• Infrastructure
• Trade sale