Xenon's Eco Eridania bolts on Mengozzi

Amedeo Goria
05 December 2016

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Private-equity-backed Italian waste management business Eco Eridania has fully acquired competitor Mengozzi.

According to a statement, the transaction is the latest of five bolt-on acquisitions by the Ligurian enterprise and was financed via consecutive capital injections from its existing shareholders, including Italian private equity house Xenon Private Equity. The company plans to expand further through additional acquisitions.

The owners provided a €20m capital increase to support the company's acquisitions as part of its expansion strategy. Moreover, the company raised additional capital via the issue of an €82.5m seven-year bond, split in three tranches and inked by Muzinich & Co and Pemberton Asset Management. The company raised the first tranche in 2014 and the second in 2015, while the last tranche is expected in the first quarter of 2017.

As part of the deal, Eco Eridania takes control of a waste-to-energy incinerator with a yearly capacity of 32,000 tonnes, producing energy for 2.8MW. The merged group is expected to generate a pro-forma turnover of €125m during the next fiscal year.

Previous funding
In August 2011, the public-private partnership backed by the Italian government, Fondo Italiano d'Investimento (FII) acquired a minority stake in the business for €10m as part of a capital increase carried out by the company.

Subsequently, Xenon acquired a minority stake in the business via its Xenon Private Equity V vehicle, as part of a €14.3m capital increase co-led alongside FII in November 2012. The company used the fresh capital to acquire its competitor Team Ambiente.

More recently, FII and Xenon funded the bolt-on acquisition of three further companies: Paderno Energia, Elettrochimica Carrara and Technoplus through a €3.7m fresh capital injection in February 2013.

In June 2014, FII sold its stake to existing shareholders and fully exited the investment. As part of the deal, Xenon became majority shareholder in the business.

Company
Founded in 1978, Mengozzi specialises in waste management, focusing on the healthcare and pharmacological sectors. Headquartered in Forlì, the company employs a staff of 140.

People
Xenon Private Equity – Franco Prestigiacomo (CEO).
Eco Eridania – Andrea Giustini (chair).

Advisers
Acquirer – Studio Gelmetti (legal); Studio Legale Pavia e Ansaldo (debt).
Vendor – Studio Pinza (legal); Studio Associato Sapda e Buda (tax).
Debt – Linklaters (legal).