American private equity (PE) giant KKR is planning to relaunch the sale of its waste management portfolio company after a delay of almost a year, three people with knowledge of the matter said.
The PE firm is eyeing up to $1-1.5 billion from its exit from RE Sustainability Ltd (formerly Ramky Enviro Engineers Ltd), the three people said on the condition of anonymity, adding that global PE firms such as Blackstone, Carlyle, CVC, Macquarie and Stonepeak Capital have been approached by bankers on behalf of KKR.
“The IMs (information memorandums) are likely to be sent out later this month, with the deal talks likely to formally commence then,” one of the persons cited above said. The deal activity comes a year after KKR carved out the industrial waste management business from Ramky Enviro and appointed investment banks JP Morgan and Barclays to run the sale process.
This is KKR’s second attempt to exit the business after it tried to sell the company in August 2021. The company also explored a public listing.
Also read | This is KKR’s second attempt to exit the business after it tried to sell the company in August 2021.
KKR bought nearly 60% in Ramky Enviro Engineers for approximately $530 million in August 2018. Last year, Mint was the first to report on KKR carving out and selling the municipality business from RE Sustainability back to the company’s founder–Alla Ayodhya Rami Reddy.
In an emailed response, a KKR spokesperson declined to comment. A spokesperson for JP Morgan, too, declined to comment. Queries to Barclays, CVC, Blackstone, Carlyle, Stonepeak and Macquarie remained unanswered till press time.
Founded in 1994 by Reddy, who is a member of Parliament from YSR Congress, the company offers services including management of municipal solid waste, industrial waste, bio-medical waste, e-waste, apart from recycling, waste-to-energy projects and integrated environmental services like water and waste treatment services, setting up desalination plants, laboratory services, waste containment.
And this | KKR to carve out RE Sustainability unit
As per an October 2024 ratings release by India Ratings, RE Sustainability Ltd processes more than 1 million tonne of industrial waste per annum, along with serving across 45,000 healthcare establishments.
The Industrial Waste Management (IWM) business will continue to be the highest contributor to its overall retained business. During FY24, RE Sustainability’s consolidated revenue for its retained business stood at about ₹21.3 billion ( ₹2,130 crore) and Ebitda of ₹720 crore, the release from India Ratings said. Ebitda refers to earnings before interest, tax, depreciation and amortization.
“Re Sustainability Ltd’s retained business has high entry barriers as the government regulations do not allow setting up of alternative hazardous waste disposal sites and biomedical waste disposal sites within 400 km and 75 km, respectively, of existing sites. This has created a strong competitive advantage for ReSL, which led to strong profitability,” the rating report added.
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