19 April 2017 by Will Date

‘Growing interest’ from Chinese investors in UK waste market

Chinese investors are showing ‘growing interest’ in the UK and European waste management market, consultancy firm Grant Thornton has claimed in its annual waste sector review.

The latest edition of the annual report which was published last week, looks at merger and acquisition activity and legislative changes within the UK waste market in 2016.

Urbaser’s Javelin Park EfW plant is being developed in Gloucestershire – the company had investment from China in 2016

On completed deals within the UK market, Grant Thornton claims that merger and acquisition activity was up 26% in 2016 compared to the previous year, with 48 deals having completed.

The figures reverse a downward trend seen in 2015, Grant Thornton claims, when 38 deals were completed, with the number of transactions having increased throughout the year, with a total of 15 completed during the final quarter of 2016.

The consultancy claims that there has also been a shift to larger M&A deals having been completed in 2016, with a number having surpassed the £60 million mark, unlike in 2015.

China

The largest of the deals completed in 2016 was the acquisition of the Spanish-owned firm Urbaser, by the Chinese investor Firion, estimated to be worth around £2 billion (see letsrecycle.com story). Interest has also been reported from the Chinese-owned business EEW Energy from Waste Ltd, which told letsrecycle.com that it is examining the UK energy from waste sector for acquisition opportunities (see letsrecycle.com story).

Commenting on the Firion deal, Grant Thornton claimed that it is part of a wider interest in the European and UK waste sectors – a trend which it claims is likely to continue into 2017 and beyond.

It said: “The Firion deal is an example of growing interest in the UK and European waste management market by Chinese investors this year. As well as a number of high profile deals across Europe, Chinese investors were also reportedly interested in the acquisition of Biffa before the integrated waste management group eventually completed an IPO in October 2016.

“This trend is likely to continue into 2017 and beyond as investors are attracted by the high growth energy from waste market in Europe as well as expertise in waste treatment technologies.”

Elsewhere the report notes that hazardous and industrial waste and waste management have overtaken recycling have overtaken recycling as the sub-sector receiving the most investment, accounting for 31% of deals respectively, whilst recycling accounts for 29%.

Click on image to access Grant Thornton’s Annual Waste Review

“Whilst recycling deal completions remain at a similar level to last year there has been an uplift in other areas of the waste sector, which when combined with more diversity in the type of deals taking place accounts for the apparent drop,” the report adds.

Legislation

Also in the report, Fiona Ross of Pinsent Masons also provides an outline of the key legislative changes affecting the waste sector. The second half of 2016 was overwhelmingly dominated by the issue of Brexit, she wrote.

Looking ahead, she noted: “As the shock of the Brexit vote starts to wear off, and the government begins to take steps to extricate the UK from the EU and to shape the new UK legal landscape, manufacturers and waste industry players will have to watch carefully to see whether resource efficiency and a circular economy are enshrined as core principles or whether waste policy is allowed to drift yet further.”


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