In one of the the first leveraged buyouts in the cleantech sector, Abu Dhabi's Masdar Cleantech Fund and London's Virgin Green Fund have announced the acquisition of established refinery services operator DuraTherm, the Texas City-based business that also has operations in metal recycling, for an undisclosed sum.
The acquirers said that the acquisition, structured as an asset acquisition, was funded by debt raised from HSH Nordbank AG.
DuraTherm's founder and exiting CEO Barry Hogan will continue to serve the company as an adviser. According to incoming CEO Kevin Trant, formerly with Siemens Water Technologies as EVP of its services and products group, the newly positioned company has a major commitment from its venture-oriented equity investors to put it on a footing to expand its business model rapidly on three fronts.
The Masdar Clean Tech Fund LP is a $250-million investment vehicle made up of commitments from Abu Dhabi Future Energy Company (ADFEC), Consensus Business Group (CBG), Credit Suisse (CS), who co manage the fund, and Siemens AG.
The fund leverages Abu Dhabi's larger alternative energy initiative, known as the "Masdar Initiative" that was launched in March 2006 to champion the development of advanced energy technologies and promote diversified and sustainable economic growth. The initiative leverages Abu Dhabi's considerable financial resources and energy expertise into innovative solutions for cleaner, more sustainable energy production and resource conservation.
Virgin Green Fund has been established to invest in companies in the renewable energy and resource efficiency sectors, primarily in the United States and Europe. Virgin Green Fund is a sector-focused, multi-stage investment firm investing primarily in expansion/growth capital opportunities with offices in London and San Francisco. The Fund has been launched with the backing of the Virgin Group and a strong network of additional limited partners.
DuraTherm addresses a variety of waste streams, including oil-contaminated drill cuttings, refinery wastes, petrochemical wastes, hydrocarbon- contaminated soils, spent catalysts, and other petroleum-compatible residuals. The company's reclamation and recycling services provide an environmental solution superior to the alternative disposal methods of incineration and landfill.
It has proprietary technology for treating sludge from oil waste recycling to render about 90 per cent of waste capable of disposal in standard landfills, or with its mobile units at a customer's site, for waste streams generated by petroleum and olefin-related industries. The proprietary technology produces "clean" residuals while maximising the recovery of metal and oil values contained in the wastes.
Under the new owner ship, DuraTherm will focus on a combination of increasing metal and oil prices, potential regulation and a market demand for environmentally friendly waste handling irrespective of cost and regulatory imperatives have created a huge opportunity for the company to increase the volume of treatment at its fixed facility in the refinery-heavy Gulf Coast region. DuraTherm will also be able to rapidly deploy new mobile technology for on-site remediation of customers' wastes.
The new investors say they are providing additional capital to support DuraTherm's growth. The facility's capacity and capability will be dramatically improved as a result of this investment. DuraTherm will also invest in improving and deploying its mobile DuraTherm Desorption units, thus expanding its geographic availability to both US and international customers.
"Regulations relating to the handling of petroleum waste continue to strengthen in favor of environmentally friendly solutions such as the DuraTherm Desorption technology," said Wayne Keast, a partner of the Masdar Clean Tech Fund, acting on behalf of Consensus Business Group. "We are pleased that the key management team who created the opportunity remain committed to the future of the business. This speaks volumes for their belief in and commitment to the Company. We are sure Kevin Trant's leadership will only serve to bolster and enhance the existing team." Mr. Keast will be joining the board of DuraTherm.
Evan Lovell, partner of Virgin Green Fund, who also joins the board, said, "We are very excited about our involvement with DuraTherm. We believe the company is well-positioned to capture a greater share of the petroleum waste being generated by the petroleum and petrochemical industries and to continue to provide world-class services to its customers on a global basis. One of our core initiatives has been to seek investment in companies providing clean and environmentally friendly services to the traditional oil and gas area. This is a differentiated transaction in the Clean Tech investing sector because very few leveraged buyouts have been completed in the sector to date."
"With a strong position in the United States, we believe that DuraTherm is well-positioned to expand globally, and Masdar looks forward to driving that expansion," said Alex O'Cinneide, partner at the Masdar Clean Tech Fund. "We have been working with DuraTherm for more than nine months and feel, given the enormous promise of their technology combined with their world class management, more than pleased to have DuraTherm in our portfolio. We are also very pleased to once again work with the Virgin Green Fund and to bring them as equal equity partners on this transaction."
O'Cinneide will also join the DuraTherm board, thereby completing the investor groups' representation.