Beijing Enterprises Holdings (HK:0392) is acquiring Germany’s EEW Energy from Waste GmbH, from Swedish private equity fund EQT Infrastructure II, for EUR 1.4 billion ($1.6 billion).
EQT Infrastructure II acquired a 51% stake in EEW in March 2013 reportedly at a valuation of EUR 1 billion, and developed the business in partnership with E.ON, one of Europe’s largest energy groups. In April 2015, EQT Infrastructure II purchased the remaining 49% of the shares reportedly at valuation of EUR 1.3 billion, after E.ON announced its group restructuring program.
EEW, formerly known as E.ON Energy from Waste AG, is the market leading energy-from-waste company in Germany, also active in Luxembourg and the Netherlands. With 1,050 employees the company operates 18 Energy from Waste plants and produces electricity, district heating and process steam for industrial use. The plants are modern facilities with state-of-the-art technology, frequently updated to meet the latest technological standards. EEW operates an installed waste capacity of around 4.7 million tonnes making an important contribution to European sustainable economy and playing a vital part in the local energy infrastructure, producing in total 6 TWh of energy. In 2014, EEW generated sales of about EUR 539 million. The company, originally known as BKB, was founded in 1873 and is based in Helmstedt, Germany.
“The acquisition is significant for China, as government researchers have estimated as much as 7 billion tonnes of waste is buried around China’s major cities, and the capital Beijing is now surrounded by a belt of landfill sites known disparagingly as the seventh ring road,” said Reuters Frankfurt reporter Arno Schuetze. “To ease the problem, China aims to convert 30 percent of its rubbish to electricity by 2030, up from less than 5 percent now. However, plans to build waste-to-energy plants have routinely been opposed by residents alarmed by pollution risks.”
“The deal values the company at 9.5 times its core earnings, roughly in line with the 9 times core earnings that China’s Cheung Kong Infrastructure (1038.HK) paid for AVR when it bought the Dutch energy-from-waste company in 2013,” added Schuetze.
Beijing Enterprises Holdings Ltd. is an investment holding company and the sole overseas listed conglomerate controlled by the Beijing Municipal Government. Its mission is to channel capital, technology and management expertise from international capital markets into mainland China. Its Piped Gas Operation segment distributes and sells piped natural gas; provides natural gas transmission, and gas technology consultation and development services; surveys and plots underground construction projects; constructs and installs gas pipelines and related equipment; and provides repair and maintenance services. Its Brewery Operation segment produces, distributes, and sells brewery products.
The company’s Sewage and Water Treatment Operations segment constructs sewage and water treatment plants and other infrastructural facilities; provides construction services for renovation projects; offers sewage treatment, and water treatment and distribution services; provides consultancy services; and licenses technical know-how that are related to sewage treatment in China and internationally. The company’s Corporate and Others segment constructs waste power plants and broadband infrastructure; sells software; provides Internet services, and IT technical support and consultation services; and invests in properties. The company was formed in 1997 and is based in Wanchai, Hong Kong. It is considered a Red Chip company due to its listing on the Hong Kong Stock Exchange.
“Over the past three years, we have used our industrial expertise to support EEW in strengthening its core business processes,” said Matthias Fackler, partner at EQT Partners, investment advisor to EQT Infrastructure II. “Under the leadership of a new management and complementary industrial board, this has led to broadening EEW’s customer base and a very efficient organization, setting the business up well for the future. We are convinced that Beijing Enterprises Holding is the right partner to support the further development of EEW including its continued domestic and international growth.”
“EQT’s support and expertise have been instrumental to the optimization of business processes at EEW, and have provided a solid foundation for the company’s further growth. We look forward to future success together with Beijing Enterprises Holding, and to the continued development of the company,” said Bernard Kemper, CEO of EEW.
EQT Infrastructure II has been advised on the deal by Morgan Stanley. Beijing Enterprises was advised by Lazard and UBS.
EQT is a leading global private equity group with approximately EUR 29 billion in raised capital. EQT has portfolio companies in Europe, Asia and the US with total sales of more than EUR 17 billion and approximately 140,000 employees. EQT works with portfolio companies to achieve sustainable growth, operational excellence and market leadership. EQT Partners is the investment advisor to all the group’s funds. It has around 370 employees, of which approximately 200 are within the investment advisory teams. EQT is headquartered in Stockholm, Sweden. The firm and its affiliates have additional offices in Amsterdam, Copenhagen, Frankfurt, Guernsey, Helsinki, Hong Kong, London, Luxembourg, Madrid, Munich, New York, Oslo, Shanghai, Singapore, Warsaw and Zurich. The company was founded in 1994 by Investor AB, US-based private equity firm AEA Investors, and SEB Asset management.
Investor AB (INVEB.ST) is a Swedish industrial holding company, founded in 1916 and controlled by the Wallenberg family through their Foundation Asset Management company FAM, whose chairman is Peter Wallenberg, Jr., a board member of EQT. The company owns controlling stakes in several large Swedish companies, such as Molnlycke Health Care, Aleris and Grand Hotel, with minority stakes in in global listed companies such as such as Atlas Copco, ABB, SEB, AstraZeneca, Ericsson, Electrolux, Saab, NASDAX OMX, Husqvarna and Saab.
EQT Infrastructure II is a EUR 1.925 billion fund investing in medium-sized infrastructure businesses in the Nordic region, parts of Continental Europe, and North America. Investment targets are regulated infrastructure, concession-based infrastructure, market-based infrastructure and infrastructure-related services.