Waste Giant Biffa Caps Revival With IPO Plan

One of Britain's biggest waste management firms is drawing up plans for a stock market flotation less than three years after financial problems prompted a takeover by its lenders.

Sky News has learnt that the owners of Biffa have appointed Rothschild to begin preparations for a listing that would take place during the course of next year.

The move comes as Biffa, which employs more than 6,000 people, seeks to take advantage of growing demand for recycling services across the UK.

The company operates one of the most recognisable fleets of branded vehicles in the country, with 2,500 waste collection trucks, some of which are powered by biofuel from waste cooking oil.

Biffa recorded a turnover of £876m in its last financial year, a modest increase on the prior 12 months, and senior management say it is performing ahead of target.

The company's March year-end means that a flotation based on audited results will not take place until the second quarter of 2016.

Insiders said on Sunday that the company was likely to examine distributing shares to its workforce as part of any move to list on the stock market.

As well as the precise timing and valuation of a float, it is uncertain whether Biffa will need to make significant adjustments to its board before attempting to go public.

The company is chaired by Steve Marshall, who had a torrid time as the chairman of Balfour Beatty, the construction group which was forced to issue a torrent of profit warnings last year.

Once part of Severn Trent, the water company, Biffa was spun out into a separate listed business before being taken over by a consortium comprising HBOS, the high street lender, Global Infrastructure Partners and Montagu Private Equity, just before the financial crisis.

In 2008, Biffa was valued at £1.7bn including debt, but a restructuring deal agreed in 2012 wiped out much of the company's borrowings and saw senior lenders take control of the company.

Current customers in the commercial market include J Sainsbury, Royal Mail and Pret a Manger, while in the domestic rubbish collection sector, Biffa is the second-largest player behind Veolia.

In a recent interview with The Sunday Telegraph, Ian Wakelin, Biffa's chief executive, said a return to the stock market was a logical option.

"I think it would be well-positioned in the public arena. There's only one other publicly-quoted company in the environmental services sector in the UK, which is Shanks Group," he told the newspaper.

"I do think that Biffa back in public hands would be an attractive investment, particularly with its growth potential. I think it would be a good place for the company to end up. For me, the most natural home for this business is back in the publicly quoted environment."

Biffa's main shareholders are now the hedge funds Angelo Gordon, Avenue Capital and Sankaty Advisors, although Mr Wakelin and his senior management team also own some shares in the company.

A Biffa spokesman declined to comment on Rothschild's appointment.

While a float is likely to be the owners' preferred option, an outright sale is also a possibility.