KKR digs for a billion-dollar fortune in industrial waste

The global private equity firm is seeking a valuation of $1 billion for its entire stake, three people aware of the matter said on condition of anonymity.

“The sale of the municipal business back to its original promoters has been completed. KKR has appointed bankers to help it sell the remaining business of industrial waste management," one of the three people cited above said on condition of anonymity.

Also read: KKR to carve out RE Sustainability unit

KKR had acquired 60% in the company, then called Ramky Enviro Engineers Ltd, for $530 million in 2018, with the Alla Ayodhya Rami Reddy family holding the rest. In preparation for KKR's exit, its municipality and industrial waste businesses were separated, with the founders taking full control of the former, and KKR owning the latter.

“The initial outreach to private equity funds have been done. Investment banks Barclays and JP Morgan have been appointed for the same," the second person added.

This is the American private equity firm’s second attempt to the sell the business, after trying a sale in August 2021, and a public listing. According to the second person cited above, infrastructure funds and other buyout funds have been approached. “It is more palatable now. We will need to discover the value of the business," he added.

According to regulatory and NCLT filings seen by Mint, boards of the two RE companies -- RE Sustainability Ltd and Mumbai Waste Management Ltd approved the demerger on 18 January. The parties filed for approval at the NCLT, which approved it on 9 May.

“The idea is to sell it to another sponsor as there is still immense growth potential in the industrial waste management business. There could be manifold growth from here on," the third person said.

Mint first wrote about the PE firm's plan to carve out the municipality business in September 2023.

A KKR spokesperson declined comment, while queries sent to the company remained unanswered.

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Founded in 1994 by Reddy, a member of Parliament from YSR Congress, the company offers services including management of municipal solid waste, industrial waste, bio-medical waste, e-waste, apart from recycling, waste-to-energy projects and integrated environmental services like water and waste treatment services, setting up desalination plants, laboratory services and waste containment.

“The industrial waste management company has earnings before interest, tax, depreciation and amortisation or Ebitda of around $150 million," the third person said. In FY23, the combined business had operational revenue of ₹3632 crores over an Ebitda of ₹1145 crore ($137 million) and a profit after tax ₹479 crore, according to VCCEdge, the data platform of HT Media. The company has not filed FY24 earnings yet.