A long-talked of sale of Viridor’s recycling assets looks to be moving closer.
Within the waste management sector there is a growing expectation that Viridor’s new owners, KKR, have opted to sell on the recycling activities but keep the energy from waste business.
Consequently, Viridor’s recycling division, which is strong in plastics, glass and paper is understood to be being offered to the UK marketplace. [update: November 2020, there is expectation that this sale will now not include plastics, see letsrecycle.com story]
Global investment firm KKR acquired Viridor from the Pennon Group in July this year for £4.2 billion.
In the past, the Pennon Group has highlighted how the performance of the recycling division had hit its profits (often in contrast to the stable earnings generated by energy from waste).
Options now under consideration are understood to involve the sale of the recycling business as a whole, or the potential for sale of specific material streams or on a site by site basis. A management buyout is said to be unlikely.
The possible sale of the recycling assets – Viridor does not run local authority collection services – was also highlighted this week in a report from the Reuters news agency, which claimed that the business was for sale and private equity funds were interested.
Viridor today told letsrecycle.com that it had no comment to make on the matter.
While Reuters suggested equity funds could be interested, it is thought that fund bidders for Viridor’s recycling assets are not very likely with a more probable purchaser being one or more of the larger UK waste management operators, such as Veolia, Biffa and Suez.
Resource management, involving the first stage of reprocessing of recyclables, is becoming more of a theme for the waste management sector and Viridor’s recycling infrastructure could contribute to this. For example, both Biffa and Veolia have plastics recycling plants while Veolia also has WEEE and glass facilities.
Viridor’s top team includes chairman Ian Wakelin, a former chief executive of Biffa, who knows the UK recycling sector well and is expected to play a key role in any sale moves.
The reason for a sale is thought to be down to the volatility of the recycling market which is seen as having prompted KKR to favour sticking with Viridor’s 11 energy from waste plants and jettisoning recycling. KKR is thought to have almost opted to keep the recycling side but has recognised the stable income stream generated by the long-term contracts which the energy from waste plants have, usually with local authorities.
Investment funds are showing keen interest in the UK’s energy from waste sector. In August this year ICON bought a stake in FCC Environment’s energy from waste plants (see letsrecycle.com story) and Cory Riverside Energy remains owned by investors after a deal in 2018 see (letsrecycle.com story)
Viridor has 11 energy from waste plants, across England, Wales and Scotland. They are in: Runcorn (2); Ardley, Oxfordshire; Avonmouth, Bristol; Exeter; Beddington, south London; Cardiff; Dunbar; Glasgow (gasification); Peterborough; and the Lakeside joint venture with Grundon.