Asia's richest person expands reach into Europe

NDTV Profit Desk

17 Jun 2013, 05:58 PM IST

Asia's richest person expands reach into Europe

A consortium of companies owned by Li Ka-shing, the richest person in Asia, said Monday that it would pay more than $1 billion to acquire Dutch waste management firm AVR from its private equity owners.

Li's companies have been seeking to expand their already considerable global portfolio of investments in utilities and infrastructure, which include electricity plants in Australia and natural gas networks in Britain.

Under the 943.7 million euro, or $1.26 billion, deal, four Li firms will acquire AVR, which incinerates waste and converts it into energy, from a Dutch company jointly owned by private equity firms Kohlberg Kravis Roberts and CVC Capital Partners.

Cheung Kong Infrastructure and Cheung Kong Holdings, two Hong Kong-listed companies controlled by Li and his family, will each have a 35 percent stake in the purchasing consortium. Power Assets Holdings, which provides electricity to Hong Kong Island on a monopoly basis, will have a 20 percent stake; the privately run Li Ka Shing Foundation will take up the remaining 10 percent stake.

Li, 85, is ranked by Forbes as the eighth richest person in the world, with a net worth estimated at $31 billion as of March.

In a joint announcement Monday, the Li companies said AVR represented a ''compelling long-term investment opportunity for the consortium'' and ''an attractive opportunity for infrastructure investors with the potential for appropriate growth opportunities.''

During the buyout boom that preceded the global financial crisis, KKR and CVC teamed up in 2006 to acquire AVR from the municipal government of Rotterdam in a deal that valued the waste management firm at 1.4 billion euros, including debt.

In 2007, KKR and CVC acquired Dutch waste collection firm Van Gansewinkel Groep for an undisclosed sum and merged it with AVR.

But the merged Van Gansewinkel Groep has struggled financially in recent years. Despite its revenue rising 4.7 percent to 1.25 billion euros last year, the company's net losses widened to 65 million euros from a 25 million euro loss in 2011.

In a statement Monday, Cees van Gent, chief executive of Van Gansewinkel Groep, described the AVR spinoff as a ''new important step forward.''

''With this transaction, we significantly strengthen our financial position,'' he said, adding that Van Gansewinkel would remain focused on waste collection and recycling after the deal.

For its part, AVR remains a profitable business. It has 434 employees and reported revenue of 256 million euros last year, according to Van Gansewinkel.

Stock exchange filings made Monday by the Li companies said AVR and its subsidiaries reported net profit of 42.3 million euros last year, more than double the profit of 20.7 million euros in 2011.

The deal remains subject to approval from the Dutch works council and European antitrust regulators and is expected to close during the July-to-September quarter, the companies said.

The AVR acquisition marks the second time in the past year that the same four Li companies have teamed up to acquire a European utility. Last July, the companies announced a deal worth 645 million pounds, or $1 billion at the exchange rates of the time, to acquire MGN Gas Networks, a British company doing business as Wales & West Utilities, that distributes natural gas throughout Wales and southwest England.