Li firms buy Dutch waste venture

South China Morning Post 18 June 2013
A group of companies controlled by Li Ka-shing are buying Dutch waste management firm AVR Afvalverwerking for HK$9.7 billion, Li’s second investment in a waste treatment firm this year.
Cheung Kong Infrastructure (CKI) and Cheung Kong (Holdings) will each take a 35 per cent stake, while Power Assets will own a 20 per cent stake and Li Ka Shing Foundation 10 per cent.
AVR is the largest energy-from-waste (EfW) player in the Netherlands, with 23 per cent of the market. It has two waste incinerators with a combined capacity of 1,700 kilotons per year.
CKI and Power Assets plan to finance the deal with 40 per cent debt and 60 per cent equity and have an internal rate of return on equity target of 12.5 to 13 per cent, JP Morgan analyst Elaine Wu wrote, citing the management of the consortium.
“Assuming a 12 per cent return on equity, we estimate earnings per share for CKI will have upside of 2 per cent for the financial year 2014, and 1 per cent for [Power Assets]. We believe they will likely seek to acquire more assets in the [European Union] in future,” Wu said.
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