KKR Pursues $2 Billion-Plus Valuation in Sale of Re Sustainability

KKR Re-Launches Sale of Re Sustainability Limited, a Leading Indian Waste Management Player

Private equity giant KKR has initiated the highly anticipated sale of a controlling stake in Re Sustainability Limited, a leading integrated resource management player in India's waste management segment. The move marks a fresh attempt by KKR to exit the firm after nearly 7 years of investment, following an earlier strategic review in 2021 that explored both stake sale and IPO routes.

Re Sustainability Limited, formerly known as Ramky Enviro Engineers Limited, has undergone a demerger, separating its municipal solid waste management business, which was sold back to the firm's founder Alla Ayodhya Rami Reddy. The official nod for the internal reorganization from the National Company Law Tribunal (NCLT) has been received.

Industry sources indicate that several global funds, including Macquarie Group, Bain Capital, TPG, and Blackstone, are likely to show preliminary interest in the deal. Private equity firms Advent International and Carlyle may also join the fray, with consortiums potentially being formed at a later stage due to the large cheque size.

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The proposed transaction follows a demerger of Re Sustainability Limited, as part of which the municipal solid waste management business was separated and sold back to the firm's founder. The deal is expected to be valued in excess of $2 billion, although valuations may vary depending on market conditions and the nature of discussions.

The retained business of Re Sustainability Limited, encompassing industrial waste management, biomedical waste management, recycling, environmental services, facilities, and auxiliary services, as well as environmental and sustainability consultancy services, reported EBITDA of Rs 7.9 billion in FY25. The retained business benefits from significant entry barriers, stringent regulatory approvals, and the need for specialized infrastructure, supporting healthy cash flow visibility.

According to a report by India Ratings & Research, the retained business continues to benefit from structural demand tailwinds over the medium term, which will restore operating scale and profitability by FY27 to levels broadly comparable to those prior to the demerger. The report also expects the diversification to improve with expanding service lines in industrial waste, improved profitability from recycling business, and steady growth in business diversification in Singapore business.

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Listed firm Antony Waste Handling Cell Limited, which has seen its share price rise by more than 14% in the last month, merged with its arm AG Enviro Infra Projects Private Ltd post the NCLT nod in December.