China Everbright International Limited, a Hong Kong based environmental services firm, has expanded into Europe with the acquisition of a major Polish waste management firm, NOVAGO Sp. Z o.o.
The company said that the €123 million acquisition includes a €118 million equity purchase price and €5 million land bank.
According to Everbirght (HKSE: 00257), the acquisition of NOVAGO is the largest Chinese acquisition in the environment industry in Central and Eastern Europe, and is in line with the "One Belt One Road" initiative.
Under the initiative China has agreed to strengthen cooperation with Poland in environment and renewable energy fields after President XI, Jinping's recent visit to Poland.
Established in 1992, NOVAGO is said to be the largest independent waste treatment company in Poland. It was awarded as one of The Most Dynamic Polish Company by Forbes in 2016 and The Fastest Growing Polish Company by Gazele Biznesu in 2015.
Everbright added that NOVAGO has a leading position in the mid-to-upper stream of the waste treatment value chain in Poland, maintaining over 30% market shares in its core operating regions – Warsaw and Olsztyn Province. It was also said to have good local expertise and a business portfolio which includes municipal waste treatment, waste recycling and landfill for biogas production, production of high-calorific alternative fuel Refuse Derived Fuel (RDF) and biogas.
Everbright explained that NOVAGO has six technologically advanced production sites in four provinces and treated 890,000 tonnes of waste in 2015.
It was also said to lead Polish RDF production in both quantity and quality, supplying alternative fuels to cement plants across Poland.
The company has maintained a high growth rate in the past few years. In 2015, NOVAGO's revenues reached PLN135 million (equivalent to €30 million).
According to Mr. Chen Xiaoping, CEO of Everbright International, the acquisition serves as an important platform for the company’s overseas development strategy and is a solid foundation for future expansion in the Central and Eastern Europe market.
“The business can be further expanded by integrating the Group's advanced waste-to-energy technology and NOVAGO's abundant local expertise,” he said.
“Moreover, NOVAGO's success can be brought back to China for replication. We believe the common management philosophy and development plan shared by NOVAGO and us would facilitate the cooperation and create tremendous amount of synergies from this transaction,” concluded Chen.
Michał Dąbrowski, vice president of the management board at NOVAGO, added: "Our shareholder Abris' strong support and strategic vision helped us to reach new heights and, as a result, NOVAGO became stronger in every aspect.”
“Now together with such an experienced new shareholder as Everbright International is, we feel a renewed enthusiasm for the future and believe this acquisition could further strengthen our market leadership,"
The transaction is conditional upon the issuance of merger clearance by the Poland's Office of Competition and Consumer Protection.
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