Private equity firm KKR & Co. has agreed to acquire a 60% stake in environmental services provider Ramky Enviro Engineers Ltd for about $530 million (Rs 3,667 crore), a statement said.
The deal involves a combination of primary and secondary investments and has been struck at an enterprise value for Ramky at $925 million, the statement added. KKR makes the investment from its Asian Fund III.
KKR said that its investment in Hyderabad-based Ramky marks one of the largest private equity buyouts in India and that it is the first PE buyout in the country’s "highly attractive" environmental services sector.
Ramky’s suite of offerings include the management, collection, transport and processing of hazardous, municipal, biomedical and e-waste, as well as the recycling of paper, plastic and chemicals. It also focuses on renewable energy generation – with a strong focus on waste-to-energy processes – and offers consulting and integrated environmental services.
The company, which counts IL&FS Private Equity among its investors, has a presence in more than 60 locations across 20 Indian states, as well as in some Southeast Asian, West Asian (Middle Eastern) and African markets. The company handles 3.5 million tonnes of municipal waste, one million tonne of industrial waste, and caters to 20,000 healthcare establishments.
Sanjay Nayar, member and chief executive of KKR India, said Ramky provides critical services and infrastructure to reduce pollution and address the needs of the urban population and that its supports the government's Swachh Bharat (Clean India) Mission.
The Clean India Mission is an initiative to reduce pollution and improve critical sanitation infrastructure to boost living standards in cities, towns and villages nationwide.
Mareddy Goutham Reddy, managing director and chief executive of Ramky, said, "Ramky was founded by A Ayodhya Rami Reddy, with a vision that sustainable development is the key to success and with an objective of serving society through environmental management.''
Barclays and EY acted as Ramky and KKR's financial advisors, respectively. Link Legal served as Ramky's legal consultant, and PricewaterhouseCoopers and Transaction Square acted as Ramky's tax consultants. Cyril Amarchand Mangaldas and Simpson Thacher & Bartlett serve as KKR's legal consultants, with Deloitte India acting as accounting and tax advisor. Environmental Resources Management Ltd served as the environmental management advisor for the deal.
Early this year, Ramky has said it was planning to invest about Rs 1,000 crore in the expansion of projects over the next two years, with a sizeable portion in the overseas business.
Ramky has acquired 50% stake in Nature Enviro Marine Services, a Texas-based marine pollution management facility, as part of its overseas expansion.
“The company, which closed last financial year with revenues of ₹1,500 crore, expects to close this financial year with revenues of ₹1,800 crore, and is looking at doubling the revenue to over ₹3,500-3,600 crore in the next three years,” Mareddy Goutham Reddy said in a January report in BusinessLine.
Ramky’s consolidated total income stood at Rs 1,625.28 crore and profit after tax was Rs 203.16 crore for the year through March 2017, according to VCCEdge, the data intelligence platform of News Corp VCCircle.