Managing Director Igor Chacartegui talks about the importance of trust, relationships and ESG in Platinum’s latest European buyout
Urbaser is a global environmental management company focused on sustainability and innovation, with 50,000 employees serving more than 70 million people in 25 countries.
With an enterprise value of $4.2 billion, Urbaser is another cornerstone deal in Platinum Equity’s global portfolio of operating companies.
The acquisition adds to momentum generated by Platinum’s European operations, headed by partner Louis Samson, and is representative of Platinum’s commitment to putting resources on the ground across the Atlantic.
“Urbaser is another important addition to Platinum’s growing portfolio of operating companies headquartered in Europe and is a direct reflection of our commitment to investing in the region,” said Mr. Samson. “We have had great success delivering divestiture solutions to sellers in Europe and creating value across a wide range of industries. Urbaser is another exciting step forward.”
Urbaser joins European investments Fantini Group Vini, Biscuit International, De Wave Group, Iberconsa, and Awaze in Platinum Equity’s current portfolio.
Igor Chacartegui, the deal lead based in London who spearheaded the Urbaser investment, spoke recently about how the firm’s track record and commitment to investing in Europe helped seal the acquisition.
(Questions and answers have been edited for length and clarity).
PE: How did this deal come to Platinum’s attention?
Chacartegui: We’ve been doing work in the environmental services sector for several years, both in the United States and Europe, so we’ve been looking at different opportunities and trying to become smarter in the sector. We participated in a process related to one of Urbaser’s competitors in 2019.
That asset was coming back into the market in 2021. As we were getting ready, the Urbaser opportunity came up. The same actors are around these types of assets, the same intermediaries, bankers and consultants. Our business development team has strong relationships throughout the investment community that were very helpful. Obviously, the sell-side advisors were people we knew, so we reached out immediately.
PE: How important were Platinum’s relationships on the ground in Europe to executing this deal?
Chacartegui: It was critical. In the COVID period, the world became more and more virtual, and in the 12 months prior private equity activity reached a record high. Most activity was taking place virtually, but here we had a very specific situation where we had a Chinese seller, Urbaser represented between 70 and 80% of their group, and that was the most material division within their business. Typically, there are some cultural communication challenges between a Chinese corporate seller and a U.S. or European private equity fund.
It was important to build trust around our ability to provide certainty and speed because the seller was in a hurry, as they were in need to refinance their capital structure.
I was able to be on the ground as the senior deal lead and Louis was there as the face of the investment committee. Being there, present in Spain and holding hands, was vital to building that trust because the CFO of (seller) China Tianying was sent to Spain for a three-month period to deliver this deal. Holding hands with them, and with the company, was critical for them to choose us as a partner to go into exclusivity, essentially six weeks before we got a deal signed.
PE: Why was that personal touch helpful in getting this deal?
Chacartegui: Being able to resolve quickly and efficiently the vast amount of diligence that was still required during the six-week exclusivity period was key. Delivering on everything that we promised up to that point gave them the confidence and the trust that even though we were going to find issues, they had the trust that we were going to be able to find solutions.
During this six-week period, the seller uploaded and we reviewed 30,000 documents into the data room. We asked and they answered in writing 2,000 questions, and we spent about 100 hours with the company and their advisors in due diligence, in physical sessions or calls. I was on the ground in Madrid for every week during that exclusivity period. We met at least twice a week, and we built that trust.
PE: What made this a Platinum deal?
Chacartegui: We read the situation in a way that I think other competitors didn’t. Although we knew it was going to be a big due diligence exercise, we thought that there was a very good asset here with good customer relationships, very good technical know-how, exceptional contracts and assets, and very good industry dynamics and ESG trends, and decided to invest the resources required to provide the certainty and trust required by the seller.
PE: Why does this company fit as part Platinum’s ESG message?
Chacartegui: They are an environmental services company, predominantly engaging in the collection, sorting and treatment of municipal and industrial waste. On the collection side, I think they are differentiated by their ability to manage green fleets. There are examples in their contract portfolio where 100% of their fleets are electric powered with 100% renewable energy. Also in their waste treatment business, they have a strong technical capability in dealing with more and more selective waste collection, meaning that there is an increased need for separation of waste into packaging, paper and cardboard, organic waste and others using advanced and cleaner processing technologies.
This company is a global leader in the more value added waste treatment technologies such as waste-to-energy, anaerobic digestion, composting and regeneration facilities. They’re clearly aligned with the push for circular economy and greener waste treatment technologies in terms of their financial performance and potential growth.
PE: Why is ESG investing important to Platinum?
Chacartegui: We all recognize that we need to create a more sustainable environment. Our investors recognize that, and we are aligned with what our investors believe. I think Urbaser can be a contributor to improve our environment, and we are strong believers that it will also translate into value to all stakeholders involved, including our investors.
PE: What is the ops plan?
Chacartegui: Clearly this is a growing market both on collection and treatment. As I mentioned, the circular economy push is good for the financial growth of this business, so we need to continue to push at least our fair share of that growth. Beyond that, the company has done M&A in the recent past. The sector is so fragmented that you must look at acquisitions that are highly synergistic and have a strong fit.
From an operational and leadership point of view, there is a company here that has an immensely valuable portfolio of assets. The company benefits from the very strong commercial and technical know-how of the management team, but we believe that Platinum brings some sophisticated functional capability around certain areas like procurement, key performance indicator measuring and tracking, combining it with operational manufacturing initiatives around production efficiencies and continuous improvement.
PE: You joined platinum in 2017. Where you yourself part of the push to put more resources on Europe?
Chacartegui: That is absolutely correct. I was part of the push to add to the resources of the European team. I found a very dynamic team very connected to our U.S. core, and with a very clear strategy, with the resources, and a mandate to basically go and execute. We’ve been working very hard to get to the position where we are today. I think that we’re bearing the fruits of that right now.