Covanta and EQT Infrastructure to create leading sustainable waste solutions provider

Covanta Holding Corporation, a global specialist in sustainable resource management and waste-to-energy, has announced the completion of its $5.3 billion acquisition by the EQT Infrastructure V fund. Covanta also announced the appointment of Azeez Mohammed as President & Chief Executive Officer.

EQT Infrastructure strategic initiatives

Alex Darden, Partner and Head of EQT's US Infrastructure platform said, "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."

Mr. Darden continued, "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."

Building on Covanta's strong foundation as a leader in the WTE industry, EQT Infrastructure 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 advanced NOx and SOx control)

-Furthering investments in host communities (including vocational training programs and environmental undertakings)

Sustainably-linked financing

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.

Under the agreement, the new 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 also recently 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 company-wide employee resource groups. 

New leadership at Covanta

According to Covanta, their newly appointed President and CEO, Azeez Mohammed, will work closely with their 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. As part of this commitment, the deal was completed with the first ever sustainability-linked leveraged buyout (LBO) financing in the U.S., featuring environmentally focused KPIs (key performance indicators) with financial incentives attached to drive meaningful progress.

"I am excited to lead Covanta during this very transformational time," said Azeez Mohammed, President and Chief Executive Officer at Covanta. "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."