Private Equity Group Eyes $2.5 Billion Bingo Cleanup

Bingo shareholders have been on a roller coaster since the company went public in May 2017 with an issue price of $1.80. The company left investors stunned in February 2019 when it cut its earnings forecast by up to 20%. The stock price plunged to just $1.17 after the shock downgrade, after hitting $3.17 in early October 2018.

Bingo has been led by Managing Director Daniel Tartak since June 2015. He is the largest shareholder and owns 19.8%. In 2005, his father Tony Tartak bought a four-truck dumpster business that was the cornerstone of Bingo’s original business for less than $1 million. It has grown steadily under 12 years of family ownership.

The non-binding takeover proposal is believed to value Bingo at more than $2.5 billion, including debt. The company had $308 million in net bank debt as of June 30, 2020.

Macquarie’s infrastructure investment arm, Macquarie Infrastructure and Real Assets, is one of the lead backers of the bidding consortium.

MIRA has more than $130 billion in assets under management and its Australian investments include telecommunications tower company Axicom, data center developer AirTrunk, coal carrier and owner of intermodal transport network One Rail Australia, the electricity distributor NSW Endeavor Energy and the former government land titles offices in South Australia and Western Australia.

MIRA’s investments also include waste management businesses in North America and Europe.

The takeover proposal comes as federal and state governments accelerate a policy push to increase recycling rates in Australia, and amid a major infrastructure spending spree to stimulate the economy in the pandemic.

In its budget, the federal government committed $1.75 billion in additional funding to the Recycling Modernization Fund and the Modern Manufacturing Strategy. Over $100 billion in direct infrastructure investment is also planned.

In September 2019, analysts believed CPE Capital could be planning a much bigger foray into a waste management sector dominated by multinational players Veolia and Suez and local giant Cleanaway, after acquiring a $50 million facility from waste management in suburban Sydney.

The Banksmeadow facility has a capacity of up to 200,000 tonnes and collects construction and demolition waste.

The Australian Competition and Consumer Commission forced Bingo to sell it as part of the regulator’s approval of the Dial-A-Dump acquisition. This was CPE’s first entry into waste management.

Private equity firms had traditionally avoided the waste management and recycling industry. CPE, then known as CHAMP, sold Accolade Wines for $1 billion in 2018. Accolade owns brands including Hardys, Grant Burge and Petaluma.

The global recycling trade was disrupted in early 2018 by an abrupt decision by Chinese authorities to drastically tighten restrictions on the level of contamination they would accept in 24 types of recyclable waste from around the world, triggering a major upheaval in the industry.

The Banksmeadow facility purchased by CPE in September 2019 is on an 8,200 square meter site near Port Botany in Sydney.

It collects construction and demolition waste from sites in the Sydney CBD, Sydney Eastern Suburbs and Inner South West Suburbs.

Accolade Wines is now owned by US private equity giant Carlyle Group.