KKR thinks green with Ramky acquisition

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A60% stake acquisition by KKR India Advisors in Ramky Enviro Engineers (REEL), required investors to tread new ground, said a partner who worked on the deal.

“As against other sectors where there are past precedents of private equity investments, the investors in the present case had to evaluate the sector completely,” said Venkat Satyanarayana, a partner at Link Legal India Law Services, who advised REEL.

“[The investors also had to be aware of] the challenges of PPP [public-private partnership] projects in the sector in India, and associated benefits and risks. The Ramky group of companies in environmental services comprises more than 50 companies, domestic and international, and therefore, given the scale, the transaction had to be managed within stringent timelines. The sensitivity of the sector also had a bearing upon negotiations and structuring of the transaction,” Satyanarayana told India Business Law Journal.

The US$530 million deal, which took around 10 months from start to finish, was structured through a combination of primary and secondary investments and marks the first private equity buyout in this sector in India.

Hyderabad-based REEL is India’s largest integrated waste management and recycling company. It also focuses on renewable energy generation and particularly on waste-to-energy processes. REEL has a presence in over 60 locations across 20 Indian states and handles projects in Southeast Asia, the Middle East and Africa.

“Earlier, waste management in India was predominantly the task of individual urban local bodies and municipalities … however, with the substantial increase in India’s production of waste, the private sector also took up the challenge of providing waste management services,” said Satyanarayana.

“We believe that the waste management/recycling sector is now moving towards becoming a developed sector with known issues and risks. The ease of financing such projects coupled with good returns on investments are likely because of the government’s push to encourage this sector. All these factors are likely to attract traction from promoters, startups and investors.”

Cyril Amarchand Mangaldas advised KKR India on the deal. The team was led by Bengaluru and Mumbai partners Reeba Chacko, Shishir Vayttaden and Vishak Abraham.

Delhi partner Ramanuj Kumar assisted by senior consultant PK Bagga advised on certain regulatory issues. Mumbai partners Avaantika Kakkar and Bharat Budholia advised on the competition law aspects of the transaction.

The Link Legal team comprised Satyanarayana and partner Jyoti Maheshwari along with associates Rashmi Menon, Zil Shah and Shruthi Rao D.

Simpson Thacher & Bartlett was international counsel to KKR India. WongPartnership advised the private equity firm on Singapore legal aspects while Simmons & Simmons advised on the Middle East elements of the deal.