Aug 2, 2012 - UK construction and services company Kier Group plc (LON:KIE) today said it had completed a deal to invest GBP 24.4 million (USD 37.9m/EUR 31m), as a combination of preferred and ordinary equity, in anaerobic digestion (AD) firm Biogen UK Ltd.
As a result of the investment, Kier has created a 50/50 joint venture with the owner of Bedfordia Group plc. Bedfordshire-based Biogen, which designs, constructs and operates AD plants, was set up by privately-owned Bedfordia in 2005.
Kier has invested GBP 5.4 million on completion and will provide two tranches of GBP 2.5 million each in December 2012 and in July 2013. The other GBP 14 million are to be invested over the next four years to fund new AD plants, which generate energy by processing food waste.
Biogen currently owns and operates two plants, which are included in the joint venture. It had gross assets of GBP 15 million at the end of June and made a pre-tax loss of GBP 1.7 million in 2011 due to investment in business development and research. Kier said it expected that after an initial investment phase, the return on capital would top 15% and that the business would operate nine facilities by 2017. Bedfordia chairman John Ibbett said Biogen's long-term strategy had envisaged finding a partner to help it develop the commercial viability of its AD technology.
Kier said the joint venture would strengthen its environmental operations and complemented the Pure recycling business it bought in 2010. It sees large demand in the UK for AD plants as currently there was capacity to process 2.5 million tonnes of food waste, while the country produced 7 million tonnes per year.
(GBP 1.0 = USD 1.555/EUR 1.269)
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