Mc Exclusive: Five Firms Shortlisted to Proceed in Re Sustainability Sale
KKR's Re Sustainability Sale: Five Suitors Shortlisted for Next Stage
Re Sustainability Limited, a Hyderabad-based integrated resource management player and a portfolio firm of US private equity major KKR, has seen its sale process heat up with five suitors being shortlisted for the next stage. According to multiple industry sources, the shortlisted bidders include a consortium of TPG, CPPIB, and NIIF, Blackstone, Advent International, I Squared Capital, and Bain Capital.
The proposed transaction marks the next stage in the ongoing big-bang sale of a controlling stake in Re Sustainability Limited, which is seen as the largest Indian private player in the waste management segment. The sale process was initiated by KKR, which acquired a 60% stake in the firm in August 2018 for $530 million, making it the largest buyout by a PE fund in India's environmental services sector.
The shortlisted bidders will now undergo due diligence on the proposed transaction. Macquarie Asset Management, which had earlier expressed interest in the deal, has been dropped from the list of potential buyers. Industry insiders indicate that consortiums may still be explored by the bidders, with some indicating that a partner may join them later in the deal if required.
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Comparison of Bidders
| Bidder | Description |
|---|---|
| TPG-CPPIB-NIIF Consortium | A joint bid by TPG, CPPIB, and NIIF |
| Blackstone | A standalone bid by Blackstone |
| Advent International | A standalone bid by Advent International |
| I Squared Capital | A standalone bid by I Squared Capital |
| Bain Capital | A standalone bid by Bain Capital |
The sale process has been ongoing for several months, with Moneycontrol breaking multiple stories earlier at different stages. On May 6, the publication reported that six non-binding offers had been submitted by the TPG-CPPIB-NIIF combine, Blackstone, Advent International, I Squared Capital, Bain Capital, and Macquarie Asset Management. The report added that early bids were likely to be in the range of $1.6 billion to $1.8 billion, even though the valuation ask from the sell-side was higher.
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 Alla Ayodhya Rami Reddy. The official nod for the internal reorg from the NCLT has been received. The sale process is expected to be completed soon, with JP Morgan and Barclays acting as the sell-side advisors on the deal.
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Investor Takeaway
Investors should monitor the progress of the sale of Re Sustainability Limited's controlling stake.
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