Envirowaste's HK buyer keen on more New Zealand assets

Wednesday 16th January 2013

Billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings (CKI) is describing New Zealand as a core investment destination after it beefed up its presence with $501 million purchase of EnviroWaste.

The biggest user of waste material by mass in Hong Kong is looking to leverage its expertise in materials handling as it expands into waste management, while collecting a steady income from EnviroWaste.

"The operations will be able to share their expertise, and explore opportunities of synergy," managing director Kam Hing Lam said in a statement on the CKI website.

The company, which still has HK$5 billion of cash on hand after three large acquisitions in the past four months, says New Zealand has always been one of its core markets of interest.

"We are pleased with our existing investment in Wellington Electricity Lines Ltd, and have found that the country's legal system and stable political condition provide a very efficient business environment," Kam said.

In 2008, Vector sold its Wellington electricity network to CKI for $785 million.

EnviroWaste is one of only two vertically integrated waste collection and disposal companies operating throughout New Zealand.

Its 360 hectare landfill at Hampton Downs accounts for about 30 percent of annual landfill volumes in greater Auckland and is the country's largest landfill measured by remaining capacity.

"The rate of increase in waste is fundamentally linked to growth in population," Kam said.

He said Hampton Downs was poised to reap benefits as other major landfills serving Auckland approached the ends of their lives.

EnviroWaste employs about 500 people and operates 14 transfer stations, three landfills and a fleet of more than 290 vehicles nationwide.

The investment would deliver a steady income and stable cashflow, CKI said.

The vendor, Australian private equity company Ironbridge, bought the business for $259 million in 2007 and added 17 bolt-on acquisitions.

The sale price is ten times earnings before interest, tax, depreciation and amortisation.

Between 2009 and 2012 EnviroWaste achieved double-digit growth in revenue and earnings before interest, tax, depreciation and amortisation, CKI said.

"It is a quality investment," Kam said.

BusinessDesk.co.nz

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