Dive Brief:

• EQT Infrastructure is acquiring a majority stake in Indiana-based Heritage Environmental Services, a provider of “sustainability and industrial waste management services.” 
• Heritage has 37 facilities, including multiple disposal sites, and nearly 1,600 employees. The company manages an estimated 660,000 tons of industrial waste per year for more than 1,800 customers.
• The Heritage Group, parent company of HES, will remain a shareholder. The transaction is set to close in the first quarter of 2024. Financial terms were not disclosed.

Dive Insight:

This marks the latest example of growing investor interest in the environmental services space in recent years, and the second such deal this year involving a company with connections to the The Heritage Group.

Family-owned HES traces it roots back to 1970, when the company began investing in different business lines to help customers comply with federal environmental regulations. The HES name was adopted in 1986, with all subsidiaries consolidating under that banner by 1994. Heritage-Crystal Clean was spun off as a separate public company in 2007, before it was taken private by an affiliate of private equity firm J.F. Lehman & Co. in October.

According to the company’s latest sustainability report, HES has seven treatment, storage and disposal facilities for hazardous waste; a hazardous waste landfill in Indiana, which the company describes as the first permitted RCRA Hazardous Waste Part B site in the country; two incinerators in Ohio and Texas; and other locations in many parts of the U.S. The company reports managing a wide variety of hazardous and non-hazardous wastes. It also provides emergency response, on-site support and other services.

HES has grown through multiple acquisitions of its own in recent years, including the purchases of Reclamation Technologies in 2021 and Frank’s Vaccum Truck Service in 2022.

The Heritage Group also has other active subsidiaries in sectors such as construction and chemicals. Last year, another Heritage Group portfolio company — lithium-ion battery recycler Cirba Solutions — received a $245 million minority investment from EQT. This year, The Heritage Group’s facility waste consultation entity rebranded from Heritage Interactive Services to Envita Solutions.

"EQT has been a strong partner to The Heritage Group, and we are excited to expand our relationship,” said HES CEO Jeff Laborsky in a statement. “Combined with EQT, our joint commitment is to continue to bring the most innovative reuse, recycle, treatment, and disposal solutions in the United States.”

Sweden-based EQT purchased Covanta in 2021, which has led to a period of growth through acquisitions and a greater focus on non-MSW streams for that company. EQT has also realized previous investments in U.S. waste-related companies such as Synagro and RTI, and has a broader portfolio of current and prior waste investments in Europe.

“EQT is excited to partner with the entire HES team and to invest in organizational, operational and digital technology initiatives that will enhance HES's ability to provide reliable and compliant final disposal to complex industrial waste challenges,” said Juan Diego Vargas, a partner on the EQT Infrastructure Advisory team, in a statement.

Looking ahead, EQT said it sees “compelling market tailwinds” for this business due to factors such as manufacturing onshoring and the CHIPS and Science Act, among others.

Other recent deals signaling investor interest in this side of the waste industry include Republic Services’ acquisition of US Ecology and I Squared Capital’s acquisition of VLS Environmental Solutions in 2022.