KKR pays US$530 million for stake in Indian waste management firm in latest Asia push

The deal for 60 per cent of Ramky Enviro Engineers is the second in less than a month by KKR’s US$9.3 billion Asian Fund III

PUBLISHED : Monday, 13 August, 2018, 6:44pm
UPDATED : Monday, 13 August, 2018, 6:44pm

Private equity firm KKR has agreed to buy a 60 per cent stake in Indian waste management and processing group Ramky Enviro Engineers for about US$530 million, marking what it said was the first private-equity sponsored buyout in the country’s environmental services sector.

KKR said in a statement on Monday that the purchase of the Ramky stake gives the company an enterprise value of US$925 million. It bought the stake from the company’s founder, Alla Ayodhya Rami Reddy, who is also the chairman of its parent company, Ramky Group.

The investment is the second in less than a month by KKR’s US$9.3 billion Asian Fund III, after it led a consortium in a US$1.56 billion deal to take Taiwan-listed LCY Chemical private in July. According to Bloomberg, the fund has made a total of 19 investments in China, Japan, Australia, Taiwan, South Korea and Indonesia since it began deploying capital last year.

Ramky Enviro Engineers has a presence across 20 Indian states as well as in Southeast Asia, the Middle East and Africa. It treats municipal waste and hazardous industrial waste, and also handles biomedical wastes and services at over 8,000 hospitals in India. In Bawana, Delhi, it also runs a 24 megawatt power plant project that turns solid waste into electricity.

That project was undertaken by a joint venture it formed with Chinese construction and engineering company Chongqing Sanfeng Environmental Industry Group, according to local media reports.

“We will work alongside Ramky Enviro Engineers’ experienced management team to enhance the company’s mission of becoming a … leader in environmental management at a time when implementing sustainable solutions is more important than ever,” Rupen Jhaveri, a managing director at KKR, was quoted as saying in the statement. He was not available for further comment.

Barclays and EY are the advisers to Ramky Enviro Engineers and KKR respectively. Simpson Thacher & Bartlett, and Indian law firm Cyril Amarchand Mangaldas, serve as KKR’s legal counsel in the deal. The deal is expected to be completed by the end of this year, according to sources close to the transaction.

According to consultancy Bain & Co, as of July 2018 global private equity “dry powder”, or committed but uninvested capital from investors, amounted to a record US$1.8 trillion, of which about one-third was held by buyout funds.