Covanta, GIG enter partnership to develop EFW projects

By Erin Voegele | December 26, 2017

Covanta Holdings Corp. and the U.K.-based Green Investment Group Ltd., a subsidiary of Macquarie Group Ltd., have entered into a partnership to develop, fund and own energy-from-waste (EFW) projects in the U.K. and Ireland.

The partnership will be structured as a 50:50 joint venture (JV). As an initial step in the partnership, the GIG will invest in Covanta’s Dublin plant through the JV, with proceeds from the transaction fully funding Covanta’s anticipated equity requirements for all of the advanced projects in the JV’s combined U.K. pipeline. Covanta said the transaction will expand the U.K. pipeline to six development projects representing 2 million metric tons of annual capacity.

“We believe that there is significant opportunity in international markets, and particularly in the U.K., for a sophisticated energy-from-waste operator,” said Sam Zell, chairman of the board at Covanta. “This partnership with GIG is an optimal channel for Covanta to pursue that opportunity, and it represents a monumental shift in the company’s growth trajectory. The inclusion of the Dublin project in this transaction highlights value in the company’s assets and strategy, and serves as a catalyst for accelerating growth in a more capital-efficient manner. As a significant Covanta shareholder, I’m pleased to see the company complement its secure dividend and steady cash flow with a new path for growth and additional value creation.”

Regarding the JV project pipeline and funding, Covanta and GIG indicated they intend to combine their respective U.K. development pipelines, which includes a total of six projects. Within the combined portfolio, four of the six projects are well-advanced with planning approvals and contractual structures already in place. Pending permitting and project financing, these four projects are expected to begin construction over the next 24 months. Rookery remains the most advanced of the projects and is expected to break ground during the first half of 2018. The two remaining projects in the pipeline are expected to progress over the next two to three years.  

“We are delighted to have entered into a partnership arrangement with Covanta, a world-leading owner and operator of waste-to-energy facilities. The projects developed under the partnership will extract energy from residual waste that would otherwise be lost to landfill, avoiding harmful methane emissions,” said Edward Northam, head of GHG in Europe. “We are also pleased to announce GIG’s first investment in the Republic of Ireland. Investing in Covanta’s landmark Dublin project is the first step in realizing the potential of the partnership. As it enters its first full year in operations in 2018, the state-of-the-art facility will help ensure Ireland continues to meet its landfill diversion targets.”