PE firm acquires two Egyptian solid waste management companies

Cairo, Egypt-based Citadel Capital has acquired a controlling stake in two solid waste management companies, which reportedly marks its first acquisition since 2007.

The private equity firm working in the Middle East and North Africa region said the two Egypt-based companies, the Egyptian Company for Solid Waste Recycling (ECARU) and the Engineering Tasks Group (Entag), are managed as one firm. Entag specializes in manufacturing and building solid waste management equipment.

They’ll grouped as a single holding company with a new name, Entag Holding. The two companies have more than 1,500 employees.

“The solid waste management sector is under-developed across the region, with a limited number of large companies operating and much of the waste not being properly treated,” said Citadel’s Managing Director Marwan Elaraby, in a news release. “There is ample room for geographic expansion and vertical integration, including expansion into waste-based industries.”

ECARU collects and processes more than 500,000 tons per year of agricultural solid waste, with a focus on converting rice straw into compost. It also pioneered a technology that makes animal feed and is researching making medium-density fiber board, fuel pellets, and paper from rice straw.

Companies such as Australia's Mission NewEnergy has a process that it says can produce ethanol from rice straw, as well as other materials (see Mission NewEnergy claims breakthrough at bioethanol pilot plant).

In addition, ECARU specializes in municipal and agricultural solid waste management, with a contract south of Cairo to process up to 1,500 tons of municipal waste per day, produce compost, and extract recyclable materials.

It is also known for its carbon credit trading (see Global carbon trading value almost doubles in 2007). It was one of the first Egyptian companies to sign a greenhouse gas emission reduction purchase agreement with the World Bank in 2008.

The new combined company is expected to be part of Citadel’s platform investment in the solid waste management sector, and marks its 18th investment. Financial details were not disclosed.

Citadel plans to grow the new company as a majority shareholder along with existing shareholders and the management team through a series of cash injections this year and in 2010. With $8.3 billion in investments, Citadel is focused in areas such as energy, cement, agribusiness, transportation, and metallurgy.

Citadel has also listed its shares on Egypt's stock exchange in preparation for a potential rights issue, with an expected market capitalization after the listing of between £7.75 billion ($13 billion) to £16.55 billion ($27.6 billion). The company is looking into new investment opportunities in Saudi Arabia, Egypt, Iraq, and other parts of Africa.

Cleantech developments making news in the past 24 hours

• Water innovation beyond desal: the new opportunities?
• Areva to launch solar business with Ausra takeover

View the last week of cleantech developments here | Subscribe to full feed