Terra Firma, the UK private equity firm, will hold on to the waste-to-energy arm of Waste Recycling Group, which analysts say could be worth £650m, following a sale of the waste disposal business to FCC of Spain.
Terra Firma Capital Partners, the private equity firm headed by Guy Hands, has sold the waste disposal unit of Waste Recycling Group to Fomento de Construcciones y Contratas (FCC), a Spanish construction and service group, for £1.4bn (€2bn).
The transaction follows the demerger in May of Waste Recycling Group into waste disposal and renewable energy businesses. The sale does not include the renewable energy business, which is the largest renewable power generation company in the UK.
Deutsche Bank and Merrill Lynch advised Terra Firma. Morgan Stanley advised FCC. Terra Firma could make a profit of about £1bn from the sale of Waste Recycling Group, said media reports, with analysts valuing the renewable energy business at around £650m.
Hands said in a press release that Terra Firma had invested in Waste Recycling Group at a time when the UK waste industry was undergoing “radical change due to stricter regulation and the need to develop the infrastructure that will provide the future alternatives to landfill assets”. The Waste Recycling Group sale follows a busy period for Terra Firma, which is reportedly mulling a bid for Four Seasons Healthcare, a care homes business, and a £7bn offer for Thames Water, the water utility owned by German energy group RWE.