Sanlam Private Equity (SPE), a division of Sanlam Investments, has bought a controlling stake in SkipWaste, a waste management and service provider to commercial, industrial and retail clients, primarily in Gauteng.
The transaction is the fourth in SPE’s Mid-Market Fund I after investments in red-meat processor Cavalier Group, the Absolute Pets retail chain, and Q Link, a provider of payment application software to the SA insurance industry. The SPE Mid-Market Fund I is one of three impact-focused funds in the Sanlam Investors’ Legacy Range launched in 2020 to create and preserve 27,000 jobs while still delivering value for investors.
“Besides its long track record, strong market share in waste logistics and experienced management, SkipWaste was particularly attractive to us as it neither owns nor operates landfill sites and it has a strategic focus on diverting waste towards alternative and more sustainable forms of waste disposal,” said Gift Pule, an investment associate at SPE.
SkipWaste has been family owned and run since it was started in 1984, with CEO Susan McDonald at the helm for almost two decades. It operates out of three depots across Gauteng several transfer stations and a 13-hectare waste treatment facility in Springfield, just south of Johannesburg’s central business district.
SkipWaste’s business model spans on-site waste management, primary storage, waste logistics, recycling and recovery as well as alternative disposal and conversion. With more than 1,000 clients and 3,000 sites, primarily in Gauteng, SkipWaste is well positioned for growth as more clients seek out “greener” waste management solutions.
The waste company is also expected to benefit from SPE’s credentials as a black fund manager in terms of the BEE Codes of Good Practice, positioning it as the largest majority black-owned integrated waste management solutions provider in SA. About 90% of the approximately 108-million tonnes of waste produced in SA annually still goes to landfill sites, SPE said in its deal announcement on Monday.
“SkipWaste is excited to partner with our first institutional investor, with a sustainable waste management strategy, capital for growth and commercial expertise to unlock the company’s full potential,” said McDonald. “Having been a part of this business for most of my life, it was important for us to select the right partner to help us realise our next growth phase.”
Paul Moeketsi, managing partner at SPE, says the firm plans to conclude between 8 and 12 investments in its mid-market fund, which is scheduled for final close at end-March 2023.
“SkipWaste is labour-intensive and we expect that it will continue to grow its current staff complement of 454 employees. This aligns strongly with our impact objectives around job preservation and growth,” said Moeketsi.
“Overall, youth accounts for over 75% of the staff, which is majority black and from historically disadvantaged backgrounds. Coupled with the need for sustainable waste management practices and recent legislative changes to reduce landfill disposal, we are looking forward to supporting its waste diversion and diversification strategy in its next growth phase.”
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