Smart Environmental chairman and minority shareholder Simon Moutter. Photo / Dean Purcell
Smart Environmental chairman and minority shareholder Simon Moutter. Photo / Dean Purcell
Auckland-based waste management firm Smart Environmental confirms it has retained investment bank UBS - amid scuttlebutt from across the Tasman that the whole business could be on the block for between $500 million and $600m.
The company has 25 contracts with 18 councils to collect waste bins from homes andbusinesses and operates 28 refuse transfer stations and material recovery facilities.
It has about 400 staff and contracts with roughly 30 per cent of New Zealand’s local government authorities, making it the largest privately held operator in waste and recycling.
“Smart has appointed UBS to assist with raising new capital to fund our continuing growth,” chairman and minority investor Simon Moutter told the Herald.
“The company’s revenue has grown from $37m in 2017 to more than $100m budgeted for 2024. And in this infrastructure-heavy industry, growth like this requires a lot of capital,” Moutter said.
A BusinessDesk series on the waste industry noted the challenge - and opportunities - of rising regulation, particularly since 2017. Moutter did not offer bottom-line numbers, but said Smart Environmental was profitable.
Smart Environmental has contracts with roughly 30 per cent of New Zealand’s local government authorities.
The Australian Financial Review’s StreetTalk gossip column said “infrastructure investor types are betting on Smart and UBS to offer up a sizeable chunk – if not the entire business – for sale. Early expectations were of a deal pitched at 10 to 15 times earnings, implying a $400m to $600m price tag.”
“Maui Capital [42 per cent] is the largest shareholder in Smart Environmental and Milford Asset Management [20 per cent] the second-largest,” the ex-Spark boss said.
“Two founders, Grahame Christian [17 per cent] and Mike Jones [14 per cent] are also significant shareholders, with the balance of shares being owned by management.”
Moutter holds a 2.5 per cent stake.
Smart Environmental, founded by Christian, bulked up by merging with Earthcare Environmental, founded by Jones, in 2017.
Maui Capital has been asked for comment.
A March quarter update from the private equity firm said Smart Environmental had finished the first half of its financial year in line with budget.
“This is a particularly pleasing outcome given the operational challenges caused by the current tight labour market and long lead times to secure new fleet,” the update said.
The update indicated Smart Environmental would, however, require more capital to take advantage of its “leading position in organic waste” - the process that is now under way.
Maui, founded by Goldman Sachs alumni, raised $250m for its Aqua Fund (invested between 2008 and 2011), and the same sum for its Indigo Fund (invested between 2012 and 2017) is in the process of being wound down. In May, BusinessDesk reported Maui had taken a battering from Cyclone Gabrielle, which had affected the value of one of its largest investments, Hawke’s Bay pip-fruit business Freshmax - which Maui had tried and failed to exit.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
