GIP, Montagu buy add-on for Biffa

Global Infrastructure Partners, the New York-based infrastructure fund manager, and Montagu Private Equity, the London-headquartered private equity firm, have agreed to acquire Greenstar, a UK waste management firm, for £135m. Greenstar will be combined with Biffa, a larger rival jointly owned by the two GPs.

Global Infrastructure Partners (GIP) and Montagu Private Equity (MPE), the controlling shareholders of UK waste management business Biffa, have agreed to acquire a smaller UK rival, Greenstar, with a view to integrating the two companies.  GIP and MPE will pay NTR, the Irish renewable energy group, £135 million (€163 million; $197 million) for Greenstar.

Biffa, which was acquired by GIP and MPE in a £1.7 billion public-to-private transaction in April 2008, has the largest industrial and commercial waste collection network in the UK with 1,450 collection vehicles serving over 70,000 customers from 128 locations.

The acquisition of Greenstar is part of a strategy to grow Biffa’s recycling footprint. Greenstar, which has 569 collection vehicles, operates some of the largest materials recycling facilities in the UK. Employing over 2,000 people, the firm reported sales of £145 million in 2009.

Mark Keough, interim chief executive of Biffa, said in a statement that the acquisition “significantly accelerates Biffa’s strategic plans to transition to a recycling and energy-from-waste focused integrated waste management company”.

GIP is currently investing from its debut $5.64 billion infrastructure fund, which closed in 2008. Last month, it was reported that GIP was preparing to launch fundraising for a second fund which has a target of between $5 billion and $6 billion. The firm’s investments have included: the UK’s Gatwick airport; Terra-Gen, a US renewable power generation business; and Ruby Pipeline, which transports natural gas from the Rocky Mountains to the US’ West Coast.    

MPE, which raised €2.26 billion in 2005 for its third fund, is expected by market sources to come to market for a fourth fund in the latter part of this year.