An interesting development has surfaced in the auction for the $1bn company Waste Services Group that offers further weight behind the theory that EQT is in the box seat.
DataRoom understands that EQT is bidding for the asset through its infrastructure arm.
This is significant, because the cost of capital for infrastructure funds is far lower than typical private equity funds, leaving it in a position to pay more.
Also in the competition is Pacific Equity Partners, which remains in exclusive talks to buy half of the Morgan Stanley-advised aged care provider Opal.
Bain Capital is also competing as a shortlisted bidder in the second round.
However, Bain is also running at I-MED and TPG Capital’s Asian business Novotech, so may prioritise those deals for its Asia Pacific investors.
Affinity Equity Partners, advised by Barrenjoey, is also still thought to be technically in the mix, but some believe it has largely lost interest in WSG and is really out.
The action is in the second round, but there are two parts to round two, with final bids due in about three to four weeks.
Investment bank UBS is working on the sale of WSG.
It has told prospective buyers that WSG’s earnings before interest, tax, depreciation and amortisation could increase from $100m to about $250m in five years.
Established in 2016 and run by Matt Tamplin, WSG has about 6000 customers across managed services and collections.
It has brands such as Premier Waste, Superior Waste, Waste Free, Paper Resource, Specialised Services, Argus and APC Waste Consultants.
According to research and data group IBISWorld, WSG operates in general waste management, including any waste that is non-recyclable and not hazardous, recycled waste and specialised waste, including security documents and hazardous waste.
The understanding is that there’s a valuation of about $1bn on the business, which is owned by private equity firm Livingbridge.
IBISWorld says the group generated $235m in annual revenue for the year to June 2023 and EBITDA of $48m, as it made a $4m loss in that year.
At that time, its debt was $324m.
IBISWorld said that its revenue outpaced the peer average, but it had a lower profit margin, while its opportunities were that the industry had high and increasing barriers to entry and low imports.
WSG was also carrying more debt than rival companies, but was effectively using leverage to grow rapidly.
A key focus in the auction has been the group’s brokerage business and the implications of managing it.
The unit generates half of WSG’s revenue, but third parties carry out the work – and they must be managed.
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