Apax, Apollo, Platinum, Portobello or Morgan Stanley Infrastructure Partners. These names with generally Anglo-Saxon resonance – the last of them is Spanish – correspond to some of the investment and venture capital firms that for a couple of years have been gleaning through the garbage of the big Spanish cities in search of the business that others already have. they do not want to. They are betting on the waste and environmental services that large construction companies have decided to put up for sale almost in unison, and they do so convinced of their profitability.
This summer there have been two operations that confirm the turmoil in which this activity is experiencing and that, in the process, turn around the contracting of the city of Barcelona. Morgan Stanley's infrastructure fund bought Valoriza Servicios from Sacyr for 425 million euros, which manages one of the three garbage lots in the Catalan capital, valued at 400 million euros. Shortly after, it was a French investor and not a fund, in this case Paprec, that bought the CLD subsidiary from Sorigué from Lleida, which also manages one of the street cleaning lots in Barcelona.
The cleaning business is thankless because it is very personnel intensive and requires complex management. For this reason, construction companies such as ACS, Ferrovial, Sacyr, FCC and OHLA have sold their service divisions or are doing so to focus on more profitable areas such as concessions. Market sources indicate that Acciona could also consider selling its subsidiary.
A recent report by Scope Group shows that large Spanish construction companies have sold assets worth €7 billion in the last two years to reduce debt and focus on businesses with higher margins. Of this amount, the majority corresponds to services, with cleaning and garbage at the forefront.
It is at this point that investment funds come in. Sources from an investment bank explain that these firms are very interested in the subsidiaries that companies dispose of because it also gives them access to recycling infrastructure and circular economy projects. It is about buying them at a good price and then grouping them into a new company, as Portobello has done with Serveo, made up of assets from Sacyr and Ferrovial.
Changes in ownership also imply the transfer of an army of workers, whose contracts are subrogated under the same conditions. The Sorigué operation, which also affects Lleida and Tarragona, will cause 1,500 workers to change uniforms. Valoriza, sold to Morgan Stanley, employs almost 20,000 people throughout Spain.
At the beginning of June, FCC sold 24.9% of its environmental services subsidiary to the investment fund of Canadian pensioners, CPP Investments, for 965 million with the aim of dedicating the income to growth. The operation replicates the one carried out in 2018 with Aqualia, of which it sold 49% to the Australian fund IFM, the same one that entered Naturgy, for 1,024 million euros.
Two years ago, Ferrovial sold its environmental business to the German company PreZero for 1,133 million, which includes 16,000 employees dedicated to the collection, treatment and recycling of waste. That same year, the American fund Platinum bought Urbaser for 3.5 billion euros, owned by the Chinese company Tianying and, previously, ACS. Apax and Apollo were some of the firms that bid in the process.
The dance of operations also affects the multimillion-dollar garbage collection contract for the city of Madrid, awarded last year. The largest package, 500 million, went to FCC and the investment firm that it now has as a partner. Valoriza, recently acquired by Morgan Stanley, participates in another of the lots, like Urbaser and PreZero.
