Global investment firm KKR will acquire 60 per cent stake in Hyderabad-based environmental services firm Ramky Enviro Engineers Ltd (REEL) for $530 million through a combination of primary and secondary investments, valuing the company at $925 million. The two signed a definitive agreement on Sunday, KKR said in a statement.
REEL's suite of comprehensive offerings includes the management, collection, transport and processing of hazardous, municipal, biomedical and e-waste, as well as the recycling of paper, plastic and chemicals. The company also focuses on renewable energy generation – with a strong focus on waste-to-energy processes – and offers consulting and integrated environmental services.
REEL has a presence in over 60 locations across 20 Indian states, as well as in certain Southeast Asian, Middle Eastern and African markets. KKR will make the investment from its Asian Fund III.
KKR's investment in REEL marks one of the largest buyouts in India, in addition to being the first private equity buyout in the country's highly attractive environmental services sector.
M Goutham Reddy, managing director & CEO of the company, said, "With KKR as our new partner, we look forward to advancing our mission of responsibly addressing the environmental issues that emerging economies, including India, are facing today. Today marks the beginning of the next stage of REEL's evolution towards serving society."
Sanjay Nayar, member & CEO of KKR India, said, "We are excited to partner with REEL, the only comprehensive environmental management company offering end-to-end environmental and waste management services across India. REEL's work uniquely supports the Swachh Bharat Mission, and our team is pleased to invest in the growth of a company that provides critical services and infrastructure to reduce pollution and address the needs of India's expanding urban population."
"We look forward to leveraging our resources to enhance REEL's operational best practices and add value by focusing on engineering innovation, attracting managerial talent and boosting efficiency, in addition to building on REEL's rigorous focus on environmental, health and safety initiatives. We will work alongside REEL's experienced management team to enhance the company's mission of becoming a world-class leader in environmental management at a time when implementing sustainable solutions is more important than ever," added Rupen Jhaveri, managing director at KKR.
REEL has established itself as a leading and trusted provider of environmental services due to its focus on sustainability and commitment to continuous improvement. As part of this commitment, REEL uses a number of systems to monitor its procedures to ensure the adherence to best environmental management standards. The company frequently samples and analyses its business' impact on the air, soil and water of the areas where it operates, and it manages community outreach and engagement programmes. To date, REEL has been recognised for its safety and environmental efforts in numerous municipalities in India.
Barclays and EY are acting as REEL and KKR's M&A advisors, respectively. Link Legal serves as REEL's legal counsel, and PwC and Transaction Square act as REEL's tax advisor. Cyril Amarchand Mangaldas and Simpson Thacher & Bartlett serve as KKR's legal counsel, with Deloitte India acting as accounting and tax advisor. Environmental Resources Management serves as environmental management advisor to the deal.