ONE of the UK’s fast-growing independent waste management companies has been acquired in a management buyout.
The value of the deal for Pembrokeshire-based Wales Environmental has not been disclosed, but is understood to have been backed by the one of the largest equity deals ever executed to date by Finance Wales. Under its latest fund, it can make equity investment of up to £2m.
The management team have acquired the business from owners Martin Woodhall and Adrian Joyce. The latter, who is remaining as a non-executive director and equity holder, has invested in the MBO.
Gambit Corporate Finance of Cardiff acted as lead adviser on the deal.
Founded in 1979 by Mr Woodhall, Wales Environmental specialises in the provision of liquid waste management and drain services in Wales and central England from its base in Templeton.
The business has long-term contracts and repeat business with blue chip companies such as Kelda and Alstom, in addition to a wide commercial and residential client base.
The management team are targeting significant growth within Wales and additional regions of England, which may be achieved both organically and through acquisition.
The management buy-out was led by David Busby and Llyr Williams, who have been with the business for a combined total of 18 years.
With Finance Wales able to make secondary equity investment six months after a first round, there is potential for the new owners to seek potential future backing from the Welsh Assembly Government’s investment bank to help fund acquisitions.
Mr Busby said: “Wales Environmental has long-standing relationships with its key customers, and a reputation for providing an excellent customer service over many years.
“This transaction provides us with a robust platform and funding structure to achieve our growth strategy.”
The acquisition has also been backed by debt funding from HSBC’s Commercial Wales team.
The deal follows a number of management succession deals backed by Finance Wales over the last 18 months.
Chris Griffiths, deputy fund manager of Finance Wales, said: “Wales has a generation of owner managers who are approaching retirement age and wondering what to do. This deal demonstrates Finance Wales’ continued commitment to funding succession within established and profitable businesses.”
Gambit director Simon Williams said: “Wales Environmental is an exceptionally well-run business with significant growth opportunities. The waste management sector remains attractive to both trade acquirers and private equity investors, reflecting the availability of long-term contracts and strong cash generation within the sector.
“Gambit has completed four transactions in Wales alone in the last three weeks, which provides an indication of an improvement in underlying confidence amongst business owners and management teams.”
The transaction was advised and funded almost wholly by Welsh institutions. M&A Solicitors provided legal advice to the management team, Morgan Cole advised the vendors, Geldards advised Finance Wales and Hugh James advised HSBC. Financial due diligence was provided by Broomfield & Alexander, and management due diligence by Manchester-based The Quinn Partnership.
Chris Buttle, senior commercial manager of HSBC Bank said: “Wales Environmental is an ambitious and forward-looking business which has gone from strength-to strength to become industry-leading in Wales. HSBC is thrilled to facilitate this next stage of business growth and we look forward to working closely with the management team to ensure continued success and development.”
Gambit Corporate Finance has also advised the Neterwala Group of India on its acquisition of Wrexham aerospace company Tritech Group.
Tritech is a supplier to original equipment manufacturer and tier one aerospace groups.
The acquisition was initiated by Gambit in conjunction with Aarayaa Cross Border Advisers – Gambit’s Indian partner in Corporate Finance International, which is a global network of 13 boutique investment banks.
The Gambit team was led by Geraint Rowe and Simon Marsden.
Gambit partner Mr Rowe, said: “The UK is a significant source of cross-border merger and acquisition transactions for Indian acquirers, who view the UK as an attractive jurisdiction, in terms of language, economic stability, legal system and currency. This transaction outlines the enhanced advisory capability that Gambit can provide its clients by being the exclusive UK member of CFI.
“We are seeing significant levels of cross-border transactions within CFI.”