Severn Trent expands renewable energy operations with £120m takeover
Severn Trent is in the process of buying Agrivert Holdings Ltd, along with its subsidiaries, for an enterprise value of £120 million, including the repayment of some £60 million debt.
Agrivert, founded in 1994, generates renewable energy from food waste through anaerobic digestion (AD). In AD, bacteria break down the food in the absence of oxygen, producing methane, which is then collected and fed into a gas engine to produce electricity.
The organic waste company has a total of five food waste AD plants with five green and co-mingled waste composting sites, and are reported to have processed over 310,000 tonnes of solid organic waste in 2017.
Severn Trent already has two operating food waste AD plants in East Birmingham and West Birmingham, both developed by Agrivert, with another under construction in Derby. Agrivert’s assets will be incorporated into Severn Trent’s non-regulated Green Power Business and reported within its Business Services segment.
The deal will boost Severn Trent’s current 354 GWh of annual energy generation to 460 GWh, increasing its investment in energy and renewables to £300 million by 2020.
Severn Trent Chief Executive Liv Garfield said: “Renewable energy is strategically important to Severn Trent and the UK as a whole, as we work towards achieving our decarbonisation targets and delivering attractive shareholder returns.”
Meanwhile, Alexander Maddan, Chief Executive of Agrivert, said: “As we finalised the latest expansion of our AD fleet, it was a natural juncture to create an even more competitive business by combining Afrivert UK with the Severn Trent Group. Our familiarity with the Severn Trent Group gives us great confidence that the Agrivert UK business to being transferred into good hands, allowing Agrivert Limited to concentrate on the engineering and overseas market.”
Severn Trent said it will fund the deal with existing cash and bank facilities, and the deal is expected to be completed by the end of 2018.