Biffa Dumps Bids And Recycles £1bn Float Plan

The waste disposal group Biffa is recycling plans for a £1bn stock market flotation despite the threat of stock market disruption posed by the UK's looming poll on European Union membership.

Sky News understands that Biffa's advisers have begun informing bidders that its board has decided to pursue a public market listing ahead of a private sale.

A flotation is being pencilled in to take place towards the end of this year but could slip into early 2017, sources said.

Biffa's management team is keen to use the proceeds of an initial public offering to go on an acquisition spree, they added.

The news will dash the hopes of a trio of potential buyers of Biffa, who included Keppel Corporation, a Singaporean rival, and Apollo Management, the buyout firm.

Market uncertainty in the early weeks of this year, and expectations that a UK exit from the EU would exacerbate economic volatility, had led insiders to predict that Biffa would opt for a sale ahead of flotation.

Last month, Brakes Group was sold to Sysco (EUREX: SYYF.EX - news) , an American competitor, for just over $3bn, spelling an end to deliberations about a public listing of the British food-service company.

And the boss of Suez's UK recycling and recovery division - one of Biffa's main rivals - said recycling targets drawn up in Brussels had underpinned substantial investment in the industry in the UK, creating thousands of jobs.

Biffa's plans for a flotation come more than three years after financial problems prompted a takeover by its lenders.

Last autumn, the company said half-year profit before interest, tax, depreciation and amortisation rose by 19% to £67.2m, with full-year profit expectations revised upward to £119m.

The company, which employs more than 6,000 people, believes that growing demand for recycling services across the UK justifies such a price tag, which would be at a discount to Shanks, its listed peer.

Biffa 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.

Once part of Severn Trent (Other OTC: STRNY - news) , 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 (Other OTC: JSAIY - news) , Royal Mail (LSE: RMG.L - news) and Pret a Manger, while in the domestic rubbish collection sector, Biffa is the second-largest player behind Veolia.

In an interview last year, Ian Wakelin, Biffa's chief executive, said a return to the stock market was a logical option.

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 shares.

They are being advised by Rothschild, the investment bank.

Biffa declined to comment.