Appetite sharpens for waste business

Last updated 05:00 21/01/2014

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Listed infrastructure and utilities fund Infratil and global private equity firms KKR & Co and The Carlyle Group are expected to lodge second-round offers for Transpacific Industries' $1 billion New Zealand business early this week.

Sources said Infratil, which controls Wellington Airport among other infrastructure assets, had teamed up with the Accident Compensation Commission (ACC), and a handful of domestic funds with a view to keeping the asset in Kiwi hands.

Transpacific hired Deutsche Bank to launch a sale in October and first-round offers were due in early December.

Site visits to the Kiwi rubbish unit, which is expected to generate $110 million in earnings before interest, tax, depreciation and amortisation in the 2014 financial year, were held last week.

Transpacific and Deutsche Bank also met with institutional investors in late 2013, testing the appetite for a return to the NZX.

But, as always the exit route will come down to price, and while public equities markets have been bidding harder for assets than private equity and trade buyers in recent months, infrastructure assets continue to buck the trend and attract private buyers.

Infratil is known to be gunning hard at Transpacific. Its bidding group is taking its counsel from local boutique firm Morrison & Co, which specialises in infrastructure investment and also advised Infratil when it was the underbidder to Cheung Kong Infrastructure Holdings for Ironbridge Capital's EnviroWaste business in 2013.

Transpacific and Deutsche have pitched the Kiwi waste unit as infrastructure, rather than a high-growth or turnaround story which would lure private equity. It is also thought private equity bidders have raised concerns around capital expenditure requirements.

Elsewhere, one of the most anticipated Australian floats of 2014 looks to be ramping up as Pacific Equity Partners takes formal pitches from investment banks for Spotless Group this week.

PEP has been considering relisting Spotless this year but had yet to appoint advisers. It would be a quick turnaround for PEP, which took Spotless private for A$723m (NZ$769m) in August 2012 after a long drawn-out battle with the board and major shareholders.

The business is now making about A$200m in ebitda and has an equity value of between A$700m and A$800m. Fairfax

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- BusinessDay.co.nz

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