Exponent Private Equity’s exit from recycling and resource recovery services provider Enva was fuelled by strong interest from private equity and infra investors, partners Tim Easingwood and James Gunton told PE Hub Europe.
London-based Exponent agreed to sell Enva to I Squared Capital in late April. The deal was valued over £600 million ($752 million; €683 million), generating a return of over 3.5x for Exponent, according to sources close to the matter. Enva’s EBITDA grew at 12 percent on a compound annual basis between 2017 and 2023.
An exploration for a potential exit from Enva began in 2022, five years after Exponent had carved out the firm from the environment division of DCC, a Dublin-based international sales, marketing and support services group, in June 2017.
Despite a challenging economic climate, Enva attracted “strong interest” from private equity and infrastructure investors at “robust” valuation levels, according to Easingwood. Combined with Enva’s offering of essential services, the company provided an attractive investment backdrop, Easingwood added.
Easingwood said multiple parties were involved in the auction and highlighted the importance of a portable debt structure in the transaction.
In order to reach the exit, Exponent focused on several initiatives. One of these was M&A: under Exponent’s ownership, Enva completed 10 bolt-on acquisitions, including Rilta Environmental in 2018. Rilta is a provider of hazardous and specialist waste services to the commercial, industrial, construction and local authority sectors in Ireland.
Other initiatives included the integration and rebranding of four separate businesses into a platform, supported by an investment into an IT modernisation programme. Exponent also focused on upgrading the commercial function of Enva by implementing a modern customer relationship management and developing “robust” carbon footprint data for sale of recovered materials, according to Gunton.
With Exponent’s help, Enva developed a “market leading” sustainability proposition by helping customers reduce their carbon footprint, according to Gunton. This repositioning of the business as a circular economy leader boosted growth in revenue from recovered resources from around 10 percent to 30 percent.
Exponent is still keen on recycling. Within business services, a core sector for the firm, Exponent seeks out industrial services businesses where there is an opportunity to strategically reposition through operational initiatives, coupled with a focus on environmental impacts and energy transition, Easingwood explained.
“We prioritise the subsector and are particularly attracted to businesses that provide mission-critical services, like Enva,” he added.