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Sanlam Investments acquires major stake in SkipWaste

| Inside Institutional, Sustainable Investing

Sanlam Investments Private Equity recently announced that it had acquired a controlling stake in SkipWaste, a leading provider of integrated waste management solutions to commercial, industrial and retail clients, primarily in Gauteng. As a business that neither owns nor operates landfill sites, SkipWaste is a strong fit for Sanlam Investments, a firm that is deeply committed to being sustainability-led.

SkipWaste leverages its strong market share in waste logistics to offer innovative and environmentally-conscious waste management solutions by diverting waste from landfill sites towards recovery, recycling and alternative disposal.

The Private Equity team, a division of Sanlam Investments, made the acquisition through its new private equity fund, the Investors’ Legacy Private Equity  Mid-Market Fund, one of three impact-focused funds in the Sanlam Investors’ Legacy Range. This range was launched in 2020 to create and preserve 27 000 jobs while delivering value for investors. SkipWaste is the fund’s fourth acquisition after Cavalier Group, Absolute Pets and Q Link, which were announced in May last year.

Gift Pule, an investment associate within the Private Equity team, said there has been a lot of private equity activity by local and global players in SA’s waste management industry, which is positive for the economy and the environment. ‘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.’

He said the business is now poised for growth and diversification by diverting various organic, food and construction waste streams from more clients seeking “greener” waste management solutions. This will make a greater contribution to the circular economy through recycling and conversion.

SkipWaste has been family-owned and run since inception in 1984. Its CEO, Susan McDonald, has led the company for almost two decades. It operates out of three strategically-located depots across Gauteng, several transfer stations and a 13-hectare waste treatment facility in Springfield, south of the Johannesburg CBD.

SkipWaste has an integrated business model, spanning onsite 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 to sustain its access to waste-at-source and redirect more waste to alternative forms of disposal.

Susan McDonald said: ‘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. 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’.

SA generates about 108 million tons of waste annually, 90% of which still goes to landfills. Paul Moeketsi, managing partner within the Private Equity business, said: ‘Our credentials as a black fund manager, in terms of the BEE Codes of Good Practice, will make SkipWaste the largest majority black-owned integrated waste management solutions provider and a preferred waste-partner for clients looking for greener waste solutions.

‘We were attracted to SkipWaste by its uniqueness in the waste management sector and we are excited to partner with the management team of the business. Given 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.’

Moeketsi said SkipWaste is labour-intensive, and is expected to add to its current staff complement of 454 employees. ‘This aligns strongly with our impact objectives of job preservation and growth. Overall, youth accounts for over 75% of the staff, which is majority black and from historically disadvantaged backgrounds.

‘We plan to conclude between eight and 12 investments in this fund,’ Moeketsi said. ‘SkipWaste is our fourth investment and it significantly advances our investment programme. This fund is set to achieve final close by 30 June 2023 (subject to approval by limited partners).’

SkipWaste was exclusively advised by Novitas Capital Advisors. ‘SkipWaste attracted considerable interest from international and local suitors. Susan and the management team selected Sanlam Investments Private Equity based on strong cultural fit, shared values of responsibility for SkipWaste’s employees and a sense of environmental stewardship,’ said Dana Gordon-Davis, director of Novitas Capital Advisors.

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