Covanta

Founded in 1992, Covanta is the world’s leading waste to energy company, providing an environmentally sustainable solution for waste disposal. Covanta’s 41 waste to energy (“WtE”) facilities process and convert ~22mm tons of waste into enough renewable energy to power one million homes annually, while its 16 material processing facilities (“MPFs”) process an additional 700k tons of profiled waste for recycling and assured destruction per year. The company’s operations generate more than 10 million megawatt hours (“MWh”) of baseload electricity and recover 600,000 tons of metals.

Covanta is the clear leader in a very stable industry that is underpinned by long-term contracts, high barriers to entry, and positive tailwinds related to sustainability advantages versus landfills. The company has an expansive national footprint serving more than 3,000 municipal and industrial customers with approximately 4,000 dedicated employees. Covanta is a mission-driven company, focused on being a leading sustainable waste solutions provider in an increasingly circular economy.

Market Trends and Drivers

The waste management market is very stable and steadily growing at a similar rate to GDP and population growth. Within waste management, sustainable solutions such as Covanta’s are enjoying regulatory tailwinds due to restrictive emission standards on landfills and higher customer demand driven by municipal and corporate initiatives such as “zero-waste-to-landfill” and circular economy goals. Landfill moratoriums in states such as Massachusetts and New York are increasing the competitive moat for waste to energy and recycling, underscoring the essential nature of Covanta’s asset base. Demand from industrial clients to satisfy their emerging ESG goals has also been steadily climbing as companies prioritize more sustainable waste solutions for the environment.

Investment Potential

The Covanta investment is highly thematic to the EQT franchise, facilitating EQT’s direct participation in the broader growing circular economy through sustainable waste solutions. The goal of this partnership is to continue to help the company grow and expand its positive impact on society. Key value creation opportunities include increasing profiled waste solutions, growing environmental solutions business, increasing recycling of metals, optimizing plant operations, and strengthening leading ESG focus.