TPG takes majority control of A-Gas, doubles down on impact investing

KKR, which acquired the business from LDC in 2017 via its KKR European Fund IV, will partner with the new majority shareholder and retain a significant minority stake, according to a statement dated 17 August. The transaction marks a full exit for LDC, which had remained a minority investor since the 2017 sale, it said.

KKR European Fund IV held a final close in December 2014 at around USD 3.7bn, according to Unquote Data.

The deal, which is set to complete by the end of 2023 subject to “certain regulatory approvals”, comes at a time when impact investing has become more mainstream across European GPs and competition for sustainable investments is high.

Unquote sister publication Mergermarket reported in July that several private equity firms, including TPG and Permira, were among the contenders for A-Gas as the Goldman Sach-lead auction headed into the binding bid stage. The company was marketed off an expected FY23 EBITDA of GBP 90m to GBP 97m and KKR was targeting a 10x EBITDA multiple for the asset, as per the same report.

The agreed deal values A-Gas at roughly GBP 1bn, according to external media reports. 

The A-Gas statement didn't mention any financial terms.

The transaction falls into TPG’s thematic play on the increasing importance of establishing circular economies in critical industries, the statement said. The Texas-based GP has accumulated USD 18bn of assets under management across its impact funds since the launch of the strategy in 2016, it noted.

Following TPG’s acquisition, the company's management seeks to further scale its lifecycle refrigerant management operations by executing a number of organic and inorganic growth initiatives, according to the statement. The GP’s market expertise, particularly in the US carbon credit market, is a great fit for the future, it said.

In addition to A-Gas, TPG’s Rise and Rise Climate funds have also invested in Madrid-based Matrix Renewables, UK-based Gridserve and Germany’s Enpal. TPG Rise Fund III, a 2022 vintage and the latest fund within TPG’s Rise strategy, has a target of USD 3bn, according to Unquote Data.

Under KKR’s ownership, the business grew its revenue by 14% and EBITDA by 18% on average annually, according to the statement. It entered new markets across Europe, such as Germany, the Netherlands and Italy, while scaling its operations in the US. It also entered the Canadian market with the construction of a new refrigerant recovery and reclamation facility in Ontario, and expanded its presence in Asia through the acquisition of a Japanese refrigerant reclamation and destruction company.

Like TPG, KKR has also established a specialised approach to impact opportunities since 2018 and in April 2022 it registered its second European impact fund. Moreover, it announced yesterday (17 August) key appointments to its global infrastructure team, as it plans to further expand its focus on climate investing, according to a separate press release.

The GP has committed more than USD 40bn to sustainability-focused investments, including more than USD 30bn to climate and environmental sustainability investments since 2010. Impact infrastructure investments in the energy transition space include several renewables-focused partnerships with US-based wind and solar energy generator NextEra Energy and UK-based waste-to-energy company Viridor.

Following the trend, Apollo also launched its debut impact fund in 2020 and raised USD 1bn by 2022.

Company
Founded in 1986, A‑Gas operates across 14 countries serving several industries, including automotive, aviation, insulation manufacturers, air-conditioning, refrigeration, industrial and process cooling, medical, mining and marine. Through its recovery, reclamation and repurposing processes it captures refrigerants and fire protection gases for future re-use or destruction, preventing their harmful release into the atmosphere. Over the past three decades it has extended its offering into new growth verticals such as on-site Rapid Recovery of refrigerant gas, the safe destruction of legacy gases, and the generation of carbon credits.

People
A-Gas Group − Jack Govers (CEO).
TPG Rise Climate − Joerg Metzner (business unit partner).
KKR −Mattia Caprioli (co-head of European Private Equity).

Advisers
Equity – Citi (corporate finance).
Vendor − Goldman Sachs (corporate finance); Simpson Thacher & Bartlett (legal).

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