Private Equity News & Analysis

Montagu disposes of rubbish asset

Montagu Private Equity has sealed a lucrative exit from Cory Environmental, a waste management company, after selling the business to a group of infrastructure investors.

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An infrastructure consortium led by ABN AMRO has won the auction for Cory Environmental, a UK waste management company previously owned by UK buyout firm Montagu Private Equity, in a deal that values the business at £588 million (€732 million, $966 million).

Montagu only bought Cory less than two years ago, paying £200 million to acquire the business from logistics group Exel.

It has now sold the business for almost three times that figure to ABN AMRO’s Global Infrastructure Fund, which is operating in tandem with infrastructure funds managed by Spanish group Santander and Portuguese investor Finpro.

One of Cory’s barges

Cory is one of the UK’s biggest waste managers, operating landfill sites, street cleaning, recycling and waste collection operations, including the barges that transport rubbish down the River Thames in London.

Since buying the business in April 2005, Montagu has overseen rapid growth at Cory, which has expanded its landfill capacity by 50% and signed up a number of large public sector clients. As a result the business has been able to increase revenues from £130 million to more than £180 million.

ABN reportedly beat off competition from two other bidders at the final round of auction, including the infrastructure fund managed by Deutsche Bank’s asset management arm RREEF.

Cory’s management team will remain in place following the deal, with chief executive Malcolm Ward stressing that it was a case of “business as usual.” Jason Gatenby, the Montagu partner who led the deal said Ward’s team had “executed a highly successful growth strategy” and created a business with “excellent growth prospects”.

Hans Meissner, chief executive of ABN’s infrastructure business, said: “Cory is an outstanding business. The UK waste sector represents a substantial opportunity for future infrastructure investment as various UK and EU laws and regulations promote increased recycling and pre-treatment of waste streams.”

Dresdner Kleinwort advised the buying consortium, also providing debt finance along with Barclays Capital. Deutsche Bank advised the vendor.