A Dalmore-led consortium has agreed to buy Cory Riverside for around GBP 1.5bn, a circa 20 times EBITDA multiple deal backed with long-term debt.
Following the acquisition of the London energy-from-waste company from Strategic Value Partners (SVP) and its affiliates, Dalmore will own just over half of the asset, it is understood. The rest will be split roughly equally between the other consortium members Fiera Infrastructure, Semperian PPP Investment Partners and Swiss Life Asset Managers.
The deal is mostly being funded by equity, with some debt being provided by BNP Paribas in two tranches with tenors of 15 years and 20 years. The debt is expected to be partly syndicated post financial close.
SVP, a distressed debt specialist, bought Cory in 2014 and implemented a restructuring plan in the following years.
Cory’s most recent EBITDA was GBP 76m, which would equate to an enterprise value/EBITDA ratio of 20 times based on the GBP 1.5bn price tag, although Cory is understood to be targeting EBITDA of GBP 119m by 2027.
Cory Riverside collects waste from local authorities and businesses across London and transports it by boat to its energy from waste facility in Belvedere on the eastern edge of London. The waste is burned to produce enough electricity to power 160,000 households, with the remaining ash recycled to make materials for the construction industry.
The 750,000 tons of waste Cory processes a year is about 17% of the unrecycled waste produced in London.
Cory’s existing plant is operating at capacity but it plans to open a second plant next to its existing one, which would process another 650,000 tons of waste and bring the number of homes that could be powered by its electricity to 300,000. Cory hopes the new plant, which will be accompanied by anaerobic digestion, solar and battery storage facilities, will be up and running by 2024, but still needs to receive planning permission to build it.
Dalmore targets “lower volatility” infrastructure without significant exposure to GDP and has previously invested in the Thames Tideway Tunnel, a sewage tunnel being built in London, and Anglian Water.
Canadian investor Fiera has been making a push into the European market recently, adding to its stake in Thames Water and recently agreeing to buy IslaLink, the operator of subsea telecoms cables between the Spanish mainland and islands. Semperian was launched in 2007 to invest in UK social infrastructure.
Switzerland’s Swiss Life has also invested in the Thames Tideway Tunnel in a consortium with Dalmore.
Linklaters (legal) and JP Morgan and Credit Suisse (financial) advised on the sale of Cory, while Macquarie and Rothschild (financial) and Ashurst (legal) advised the consortium.