KKR plans to sell off Viridor, its £7 billion waste management company, by next month.
KKR's £7bn recycling group, Viridor, is set to launch a sales process next month, attracting interest from a variety of potential suitors. According to reports, CK Hutchison's infrastructure arm, along with investors such as Equitix and Brookfield, are among the potential bidders for the UK's leading waste-to-energy and recycling company [1].
Viridor, a UK-based company, operates in the recycling, waste management, and carbon capture storage sectors. One of its notable ventures is the energy subsidiary, where Equitix, an investor, holds a 35% stake and co-owns 11 sites that produce energy from waste in the UK.
In the fiscal year ending March 2024, Viridor generated revenues of £579.4mn and pre-tax profits of £153.6mn. This strong performance, coupled with its strategic position in the waste-to-energy and recycling sectors, has made Viridor an attractive prospect for investors.
CK Infrastructure Holdings, one of the largest owners of infrastructure assets in the UK, is also reportedly interested in acquiring Viridor. The Hong Kong conglomerate has previously shown interest in the UK's largest water utility and Thames Water.
Infrastructure assets in the UK have seen increased interest from investors due to their stable government-backed revenues. This trend is reflected in the £12bn assets managed by Equitix, which includes infrastructure assets like the M25 London orbital motorway.
KKR, the US private capital firm that bought Viridor from London-listed Pennon Group five years ago in a £4.2bn deal, sealed the transaction in March 2020, one of the largest during the market turmoil triggered by the coronavirus pandemic. However, none of KKR, CKI, Equitix, Brookfield, or Viridor have commented on the matter.
The potential sale of Viridor could also receive government support for its carbon capture storage venture in Runcorn, north-west England. This venture, if successful, could contribute significantly to the UK's efforts to reduce carbon emissions.
However, larger assets have proved more difficult for investors to sell in recent years amid a slowdown in takeovers and initial public offerings. It remains to be seen how the sales process for Viridor will unfold and which party will ultimately acquire this significant UK recycling group.
[1] Financial Times, Potential suitors for KKR's £7bn recycling group Viridor include CK Hutchison’s infrastructure arm and investors such as Equitix and Brookfield.
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