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In 2017, environmental protection mergers and acquisitions or cooling PPP operation projects became popular targets

Posted time:2017-02-22

In 2017, environmental protection mergers and acquisitions or cooling PPP operation projects became popular targets

[China Environmental Protection Online Market] In 2016, under the promotion of more than 20 environmental protection policies of the state and various ministries and commissions, environmental protection presents a trend of large market, large projects and large demand, and the merger and reorganization of the environmental protection industry has been further developed. According to public information, sewage treatment solid waste treatment and disposal has become the main field of environmental mergers and acquisitions.

In 2017, environmental protection mergers and acquisitions or cooling PPP operation projects became popular targets

Mergers and acquisitions in the environmental protection industry did not stop in January due to the Lunar New Year holiday. There were 8 M&A transactions in the month, involving a total amount of 350 million yuan. However, compared with the same period last year, both the total number of deals and the amount of M&A decreased in January 2017. This trend also validates the view put forward by Yu Mo Consulting in a series of review articles for the whole year of 2016: the environmental industry will have a big breakthrough in ipos in 2017, but mergers and acquisitions are likely to be less strong.

From the perspective of merger and acquisition types, five targets of the eight transactions are project companies engaged in environmental protection project operation, including kitchen, municipal sewage, landfill gas power generation, etc. It can be seen that under the tide of the rapid promotion of the PPP model, it is inevitable that there will be some good and bad operation of the project companies. Some franchise project companies with bad operation (of course, there are also some other reasons to sell) will continue to appear in the next few years, and these companies will likely become the new acquisition target of the strong environmental protection operators.


"Big and small cooperation" between listed companies and New Third Board enterprises. Due to the complementary advantages of resources (capital & technology) between large and small environmental protection enterprises; Small enterprises are subject to lower restrictions and supervision on strategy implementation; And small businesses are more flexible in expanding into emerging markets. Therefore, the cooperation and investment between large enterprises represented by listed companies and small and medium-sized enterprises typical of the New Third Board in the environmental protection industry has become a very noteworthy mode of industrial cooperation.

In early 2016, Beijing Capital and Beijing Control invested in the New Third Board enterprise Pioneering environmental protection, and this month, Tianxiang Environment, another listed company, signed a strategic cooperation agreement with Shanshui Environment, an environmental protection enterprise of the New third Board. The agreement agreed that Tianxiang Environment will jointly participate in the PPP project cooperation in Hunan and Sichuan after Tianxiang Environment invests 50 million yuan in Shanshui Environment.

When the partnership was formalized, the two jointly implemented a sizable merger. The two companies each offered 15 million yuan to acquire 50 percent of Beijing Zhongyuan Joint Company. The target of the merger is a design company with two Class A qualifications of urban and rural planning and landscape architecture, which is highly complementary to the landscape environment with a number of construction qualifications. Therefore, as can be seen from the details that Shanshui Environment holds 51% voting rights after the merger, the main purpose of this acquisition is to enhance Shanshui environment comprehensive management and restoration project implementation ability and acquisition ability.

If the project goes well, Tianxiang Environment will probably increase the shareholding ratio of Shanshui Environment in the future, and the cooperation between the two will be more in-depth. With the increasing participation of New Third Board enterprises in the environmental M&A market, "big + small" cooperation with listed companies may become a more common trend.

Overseas mergers and acquisitions in the field of soil remediation are the next city. In this month's merger and acquisition case, Boschke implementation of overseas mergers and acquisitions are also quite interesting. This is China's third overseas acquisition in the field of soil remediation. The C $13 million price is for RemedX Remediation Service, in Alberta, Canada. The province is one of Canada's leading oil and gas producing regions and one of the richest in the country -- the strong demand for environmental remediation in the upstream industry has given rise to a number of environmental remediation companies. Due to the characteristics of the region, organic pollution removal technology has become a specialty of the restoration companies in the region. In this acquisition, RemedX's core technology is thermal desorption technology, which is often used to remove organic pollutants.

On Boschke's side, in addition to the technical intellectual property rights, the target company will be able to acquire the Breton landfill, which is located in the core oil producing region and is being used to treat huge volumes of oil-contaminated soil, with a capacity of 300,000-600,000 tons per year. The project will also bring Boschko continued profits.

Start-up Group: The second start-up of the "old man" of environmental protection. In June 2016, it acquired all or half of the shares of three kitchen waste treatment companies -- Taiyuan Tianrun Energy, Suzhou Kalier Environmental Protection and Loudi Fangsheng Environmental Protection with 154 million yuan. During the same period, it announced that it would buy four wastewater treatment companies in Huizhou for 103 million yuan (later unsuccessful); In January 2017, acquired 80% equity of a restaurant waste treatment project company in Hefei for 13.77 million yuan... What is somewhat surprising is that the flurry of activity is not coming from big state-owned assets such as Beijing Capital, but from a somewhat unfamiliar Hong Kong-listed construction company called Chuangye Group Holdings. The company listed on the main board of the Hong Kong Stock Exchange in 2014 as a construction contractor in Hong Kong, mainly engaged in foundation, civil and general building works in Hong Kong. At the time of listing, the company had annual revenues of nearly HK $500 million and profits of more than 50 million years, so life was not bad.

In 2015, the company began to plan to transform into environmental protection investment in the mainland market. This confusing change came from the arrival of one person -- Zhu Yongjun. In October 2015, the then chairman and related party of Guozhong Water, a mainland listed environmental protection company, acquired 29% of Chuangye Group and became its first shareholder. However, after experiencing a series of troubles within Guozhong Water, Zhu left and was appointed as the chairman of the board of Chuangye Group in May 2016. Zhu Yongjun is undoubtedly a much more familiar face in environmental circles than the start-up group. Joining a startup group can be regarded as a second startup after leaving China.

After the development direction adjustment, Chuangye Group Holdings has established a restaurant waste treatment business network in the mainland through a series of acquisitions mentioned above, with a total operation scale of about 1,000 tons/day. At present, the domestic restaurant waste treatment industry is still in a relatively rapid development stage, and it should be a more sensible measure to take this emerging market as the main target of a second venture. According to the recent financial data disclosed by the start-up Group, the overall situation of the company is relatively good. It can be predicted that the company will be more active in the environmental protection industry in the mainland, especially in the kitchen waste treatment industry, and the entry of this enterprise will also make the industry stage a more wonderful competition.

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