EQT Infrastructure completes acquisition of Covanta

Covanta Holding Corp., Morristown, New Jersey, announced Nov. 30 that its previously reported $5.3 billion acquisition by the EQT Infrastructure V fund (EQT Infrastructure) has been completed. As part of the announcement, Covanta also formally announced the appointment of Azeez Mohammed as president and CEO.

Mohammed will work with Covanta’s full team, EQT and the company’s new board of directors to “embark on a bold program to generate compelling value for all stakeholders in an increasingly circular economy,” the company says.  As part of this commitment, the deal was completed with the first sustainability-linked leveraged buyout (LBO) financing in the U.S., featuring environmentally focused KPIs with financial incentives attached to drive progress.

“I am excited to lead Covanta during this very transformational time,” Mohammed says. “Covanta has been a mainstay in the industry due to its talented team with deep domain experience in the sustainable waste disposal space; robust portfolio of sustainable, negative-carbon waste-to-energy assets; and growth platform in Covanta Environmental Solutions that provides premium disposal and recycling solutions to broader industrial wastes. Coupled with society’s growing momentum toward decarbonization and pursuit of circular alternatives for managing waste, this creates a compelling value creation story. I look forward to working with our talented team, stellar board and a growth and sustainable-minded owner in EQT to capitalize on our potential that ensures the preservation of our planet for future generations.”

Strategic initiatives

EQT Infrastructure announced it will increase investments across the business, including: 

• Leveraging its existing asset base to move higher up the waste value chain by further incorporating recycling, beneficial reuse and other forms of sustainable waste disposal into its service offering, including building materials and energy feedstocks;
• Upgrading equipment at existing plants to reduce emissions, including baghouses and nitric oxide and sulfur oxide control; and
• Furthering investments in host communities, including vocational training programs and environmental undertakings.

“EQT has a proven track record of working with purpose-driven companies that are integral to the energy transition and growing circular economy, and we are very excited to partner with Azeez and the entire Covanta team. As the world faces ever-increasing waste challenges, EQT is committed to investing in critical community, operational and digital technology initiatives to enhance Covanta’s unique ability to provide sustainable, best-in-class solutions. Under EQT’s ownership, Covanta will continue to differentiate its service offerings, with a focus on innovation and sustainable energy,” Alex Darden, partner and head of EQT’s U.S. Infrastructure platform says.

First sustainability-linked LBO financing in the U.S.

Covanta’s sustainability-linked financing framework partners its sustainability strategy with its corporate financial strategy. Under the framework, Covanta pledges to meet two long-term goals to increase the total WTE processed, as well as waste recycled to reused materials, by 40 percent by 2030. These long-term goals are underpinned by two accompanying KPIs, which must be met by year-end 2025, compared to a 2020 baseline. The company would face significant financial penalties if it fails to meet the following targets:

• Demonstrating a cumulative growth of 2.5 percent of sustainably processed waste, which diverts more waste from landfills, therefore avoiding significant methane emissions
• Showing a 25 percent cumulative growth in waste recycled or reused, which also avoids emissions, as well as supports the development of the circular economy
  

Covanta tracks its long-term sustainability goals and annually publishes a report highlighting its progress and continued commitment to environmental, social and governance (ESG) initiatives. Alongside the closing announcement, Covanta released its 2021 Sustainability Report, which includes 2020 full-year data and in-depth analysis. Reported progress includes reduced greenhouse gas emissions, more waste diverted from landfills and expanded companywide employee resource groups. 

New President and CEO Azeez Mohammed

Mohammed brings over 24 years of leadership experience at large global business units, including at major industrial companies. Most recently, he served as executive vice president at Bloom Energy where he was responsible for helping countries and customers make the transition from a fossil fuel to a renewable hydrogen economy. Prior to this position, he served as president and CEO of multiple power- and energy-oriented business units within GE, including GE Power Conversion, GE Power and GE Energy Services.