KKR acquires majority stake in ERM

August 2021 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

August 2021 Issue

Global investment giant KKR has agreed to acquire a majority share in UK-headquartered sustainability consultancy Environmental Resources Management (ERM), replacing Canadian funds OMERS Private Equity and Alberta Investment Management Corporation (AIMCo) to become the company’s primary shareholder.

The transaction, which is expected to close in the third quarter of 2021, subject to regulatory approvals and other customary closing conditions, values ERM at $3bn.

Upon completion of the deal, ERM’s management team and partners will remain as minority investors, the two companies have announced in a statement.

KKR, which is a longstanding client of ERM’s consulting services, is making the investment through its $12.4bn Core Investments strategy, which represents capital targeting longer-term opportunities of up to 15 years, and which was launched in 2017.

“At ERM, we are committed to working alongside every one of the world’s leading organisations to achieve their sustainability goals,” said Keryn James, chief executive of ERM. “This long-term partnership with KKR will allow us to expand and accelerate our client impact, and bring new capabilities and technologies to the business of sustainability.”

In a separate statement, she added: “We are thrilled to announce this new partnership with KKR, which will drive a long-term path for growth for ERM – broadening the scope of our client service and deepening our impact on sustainability. I’m so proud of the strong, well-regarded company that we have built, with the support of OMERS Private Equity and AIMCo in recent years. It is our performance working alongside clients to address their most pressing challenges and opportunities that helped position ERM as the right fit for KKR’s investment philosophy.”

ERM operates in over 40 countries and has over 5500 partners and employees globally. Since investing in ERM in 2015, OMERS Private Equity and AIMCo have worked closely with the company and its management to support the business’ continued growth and development. This growth has been both organic and M&A-driven, with ERM having acquired 14 complementary businesses during OMERS and AIMCo’s investment period.

“When OMERS invested alongside the management and AIMCo in 2015, we saw an opportunity to back the market leader in an industry with considerable long-term growth potential, led by a proven, highly-capable and ambitious management team,” said Jonathan Mussellwhite, senior managing director and head of OMERS European Private Equity. “ERM has been a perfect match for OMERS Private Equity, our partnership approach and our substantial, evergreen capital base.

“The sale of ERM is OMERS Private Equity’s fourth realisation in Europe and our fifth successful exit globally in the past three years,” he continued. “Each sale has resulted in strong income, supporting OMERS core commitment of delivering sustainable, affordable and meaningful pensions for our members. We continue to look for opportunities to deploy capital across Europe as we build our European Private Equity business.”

“AIMCo, on behalf of its clients, is proud to have been part of ERM’s journey to be the leading environmental and sustainability advisor globally,” said Peter Teti, senior vice president, private equity, at AIMCo. “Our partnership with the management team and employees of ERM has helped position the Company to grow to new heights with the support of an investment from KKR. We would like to thank the management team and employees of ERM for their unwavering commitment to the Company and its purpose. AIMCo will continue to seek opportunities to partner with great management teams and companies as we continue to grow our global Private Equity platform.”

Richard Summerfield