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Cheung Kong Infrastructure buys NZ waste disposal group

by Jonathan Braude  |  Published January 15, 2013 at 11:06 AM
Hong Kong-listed Cheung Kong Infrastructure Holdings Ltd. is delving into waste management infrastructure down under, with an agreement to acquire New Zealand's EnviroWaste Services Ltd. for NZ$490 million ($413 million) in cash.

The deal, announced Tuesday, Jan. 15, provides an exit for Australian private equity firm Ironbridge Capital Pty. Ltd., which bought control of the company from Fulton Hogan Ltd. in 2007 for a transaction value of NZ$259 million.

Cheung Kong Infrastructure, part of Hong Hong billionaire Li Ka-shing's Cheung Kong group of companies, added that the infrastructure business was still on the acquisition trail, both globally and in new sectors.

"With cash on hand of approximately HK$5billion ($645 million) and a low gearing ratio of approximately 9% after this transaction, CKI will continue to explore acquisition opportunities that will further expand and enrich our global investment portfolio," said Cheung Kong Infrastructure managing director H.L. Kam said in a statement.

Describing the acquisition as a "unique opportunity in the land-related environmental industry, offering immense potential to CKI and other member companies in the Cheung Kong Group," Kam said New Zealand was expected to experience long-term waste volume growth as the economy continued to expand.

Auckland-based EnviroWaste is a diversified, vertically integrated waste management business with national coverage across New Zealand, serving about half a million commercial and residential properties via collection services, landfills and transfer stations. It also owns and operates ancillary businesses, including bulk waste haulage and electricity generation from landfill-gas.

Cheung Kong Infrastructure, which is buying the company through Ironbridge's holding vehicle for EnviroWaste, Barra Topco II Ltd., said the Topco had net liabilities of NZ$47 million, and net profit before interest and tax of about NZ$32 million in the year to June 2012. Its net loss after interest and tax was about NZ$19 million for the same period.

Topco's shareholders are two Ironbridge funds, which between them hold about 31% of the company, and EnviroWaste Holdings NV, an Ironbridge investment holding company, incorporated in Belgium, which owns 59.51%. Management and associated shareholders own the remaining 9.61%.

Ironbridge had not immediately put out a statement by the time the deal was announced in Hong Kong, but in a "case study" of EnviroWaste on its website, the Sydney private equity firm said it had built the company with 13 bolt-on acquisitions since the original investment. Amongst other ways it had added value to EnviroWaste, Ironbridge said it also had restructured and centralized back office and head office functions, upgraded the company's systems and processes and built a strong management team.

Cheung Kong Infrastructure is chaired by Li Ka-shing's son Victor Li. It said completion of the deal is subject to regulatory approval and is expected in the second quarter of 2013.

Neither the buyers nor the vendors immediately announced their advisers.

Tags: Cheung Kong Infrastructure Holdings Ltd. | EnviroWaste Services Ltd. | Fulton Hogan Ltd. | H.L. Kam | Ironbridge Capital Pty. Ltd. | Li Ka-shing

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