Infrastructure funds are circling Madrid-headquartered environmental services firm Urbaser ahead of the multi-billion euro sale set to kick off this month, with the deal likely to be broken up due to potential bidders’ interest in specific assets.

The process, which is due to formally start around mid-October, could fetch an enterprise value of EUR 6bn or even higher, sources familiar said, making it one of the largest M&A transactions ongoing in Europe at the moment.

The size of the deal means that bidders might seek to bid only for parts of Urbaser, or at least ask that seller Platinum Equity carve out some parts of the business and exclude subsidiaries like ones in Latin America, as most of the interest seems to be for Urbaser’s Spanish assets, the sources said.

Another key point being scrutinised is the structure of the financing, which is likely to include a debt package of as much as EUR 3bn in addition to equity for 100% of the business, the sources said.

For this reason, the potential buyers are known to have picked established banks that will also help them structure the debt. One source said it remains to be seen if the deal will eventually be structured as a LBO process or require infrastructure financing.

Despite these various complexities, the business and portfolio of Urbaser are seen as attractive to investors, and Platinum is determined to sell, so the deal is expected to go ahead relatively quickly, the sources said.

Potential bidders that have already emerged include KKR advised by Greenhill, Macquarie Asset Management advised by Barclays, as well as EQT Infrastructure and Blackstone, according to the sources.

Other names of expected bidders have included GIP, which already has a presence in the sector through its investment in French business Suez, and which is now part of Blackrock. Others are Brookfield, Stonepeak and Antin Infrastructure Partners, although some sources have said the latter two are seen as less likely to bid.

One of the sources suggested that Canadian pension funds which target European infrastructure would find it difficult to bid on their own, so if they intend to bid they’ll need to set up consortia.

NBOs are expected between November and December, while the signing with a preferred bidder is targeted around March of April, the sources said.

Platinum appointed Citi and Santander as advisors this summer to sell the business, in a deal code-named Project Sol. Latham & Watkins has also been appointed as sellside legal advisor, according to sources.

KKR in 2020 bought UK waste management and energy company Viridor for an EV of GBP 4.2bn, which was equivalent to EV/EBITDA multiple of 18.5x. Sources said that the Viridor deal however was sold at the top of the market, and that it is unlikely that current deals get that type of multiples.

Last year, Morgan Stanley Infrastructure Partners (MSIP) bought Sacyr’s waste management unit Valoriza Servicios Medioambientales for an EUR 734m EV, equivalent to a multiple of below 10%.

Urbaser is said to have an EBITDA of more than EUR 500m and an equity value of more than EUR 3bn, as previously reported.

US private equity firm Platinum bought Urbaser in 2021 from Chinese environmental services group China Tianying.

The firm focuses on three segments, including urban services such as waste collection, municipal waste treatment, and industrial waste treatment. It currently has a presence in some 25 countries and serves more than 70 people globally, according to its website.

Blackstone, Brookfield, EQT, GIP and Macquarie declined to comment. Platinum, Urbaser, the other potential bidders and the advisors did not respond to requests for comment.