Equest takes on Bulgarian waste

Equest Investment Balkans, an AIM-listed regional specialist, has invested €45 million to create a waste management market leader in Bulgaria.

Equest Investments Balkans, an AIM-listed investment vehicle, has bought three Bulgarian waste management companies for €45 million ($60 million), as it looks to build a platform for further acquisitions in the region.

EIB has agreed to buy Christota, Wolf 96 and Ditz, three waste collection and transportation companies based in Sofia. It will merge the three businesses into a holding company called Novera, which it plans to use as a consolidation platform.

The purchase price of €45 million is a multiple of about nine times the three companies’ combined profits for 2006 of €5.4 million. Their combined turnover was €22.4 million.

The newly-formed Novera, which runs more than 350 vehicles and employs over 1,800 people, will provide waste collection, street cleaning and snow clearing services in Sofia.

EIB is contributing an equity cheque of €25 million ($33 million), which it intends to refinance with senior bank loans of up to €15 million once the deal is completed. The rest of the deal will be financed through a €20 million ($27 million) mezzanine debt facility provided by Accession Mezzanine, a Central and Eastern European specialist, which will be entitled to a 6 percent stake in Novera as a result.

EIB may also invest a further €10 million ($15 million) in Novera, depending on how the three companies perform in 2007.  It also said it may bring in a strategic partner, “for further balancing the risk profile of the investment and its operations.”

Novera is EIB’s eighth investment in the South East European region. It has also backed companies in the retail, financial services, and property sectors, which together have a total market capitalisation of £189 million (€278 million, $371 million).

At 11:00 GMT, EIB’s share price was unchanged at £1092.50, giving the company a market capitalisation of £189 million.