Esken to sell renewables division at £107.7m enterprise value
Mon, 06 Nov 2023 | DIVISION SALE
Aviation and renewables group Esken has announced the sale of its renewables division to Pioneer Balmoral UK, as part of the process of winding down its business. According to Esken, the deal reflects an equity value of £84.5 million, satisfied in cash, and an enterprise value of £107.7 million, with adjustments for cash and debt-like items.
Esken Renewables is the UK’s largest waste wood fuel supplier and holds contracts to supply approximately 1.7 million tonnes of waste wood fuel to dedicated biomass plants. Pioneer Balmoral UK is a vehicle fully owned and funded by Pioneer Infrastructure SCSp, a sustainable infrastructure fund managed by Pioneer Point Partners.
The disposal is expected to generate net proceeds totalling £78.5 million, including the intercompany loan reimbursement and net transaction costs. This will be used to immediately repay £55 million of committed funding drawn under the facilities agreement and other associated costs.
Esken is currently in the process of winding down the business, with the sale of the renewables division to provide the group with increased financial stability to support its managed sale of London Southend Airport (LSA).
In the year ended February 28 2023, Esken Renewables reported turnover of £93.7 million, up from £79.6 million a year earlier, while its pre-tax profits increased from £2.8 million in 2022 to £7.9 million. The division’s net assets at the time totalled £33.4 million.
David Shearer, Executive Chairman of Esken, commented: "It is almost a year since the board announced that we would undertake a strategic review of the core operations of the group. Since then, we have worked with advisers on a comprehensive process to find the right strategic partner for the renewables business going forward. I am pleased that, in Pioneer, we have found such a partner and wish the proposed new owners, as well as the management team and staff, good luck for the future.”
"The sale of Esken Renewables is a positive outcome set against a persisting challenging market with an increase in interest rates over the last 12 months that has suppressed M&A activity.”
Shearer added that, following the sale and the subsequent repayment of the group’s debt facility, Esken's focus would now turn to other matters, including the sale of LSA, with the group seeking “a managed process to realise value for shareholders."
Find out more about the growing importance of sustainability and environmental concerns in M&A
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