Two years after IPO, it is “a matter of time” for Ambipar (AMBP3) action to enter the radar, says CFO

The company maintains an accelerated growth strategy through acquisitions, says Thiago Silva.

With 42 acquisitions in different segments and countries, Ambipar’s revenue (AMBP3) has registered a growth of more than 385% since the shares of the environmental management company debuted on the Stock Exchange, in July 2020. The amount totaled R$ 853, 4 million in the second quarter of this year. Between July and September 2020, it reached BRL 175.9 million.

The company’s shares, however, do not follow this growth rate. According to data from the TradeMap platform, between the IPO and the closing of last Monday (5), the accumulated appreciation of the shares is only 3.6%.

In the analysis of Thiago Silva, CFO (Chief Financial Officer) of Ambipar, this is due to the lack of knowledge of the market in relation to the company’s business. According to him, the company has been adopting measures to try to reverse this situation.

“As it is a new business on the Stock Exchange, we have the impression that, when the market really knows our business and its potential, the share appreciation is a natural path”, said the executive, in an interview with the TradeMap Agency. “We are doing a strong job for this, strengthening the investor relations team and having more and more interactions with the market”, he adds.

Ambipar was founded in 1995 by Tercio Borlenghi Junior, who today holds the position of chairman of the company’s board, with the objective of working in waste management. Since then, the company has expanded its operations and now has two subsidiaries: Ambipar Environment, which specializes in environmental solutions, and Ambipar Response, which operates in crisis management and emergency response.

In the coming months, Ambipar Response should take an important step. The subsidiary will have shares listed on the New York Stock Exchange. The operation takes place through the business combination of the subsidiary with a SPAC (Special Purpose Acquisition Company), forming a new company in which Ambipar will hold a share of approximately 72%.

Silva expects to see the Response papers coming to the United States next month.

Check out the full interview with Ambipar’s CFO below.

We can start by talking about the acquisitions, which have been several since the IPO. Should this pace continue? Why has Ambipar been betting so much on growth through acquisitions?

Will continue. It is within our plan to continue with the M&A (mergers and acquisitions) strategy to seek accelerated growth. Obviously, we could start these businesses that we acquired, whether to conquer new geographies, or through new technologies or to complement the services portfolio, from scratch. But any greenfield operation has a time to mature. And M&A, the way we do it, has been very successful. We believe it is the best possible way to grow rapidly and take on a size that in fact sets us apart from any other competitor. This is the strategy: to grow rapidly through acquisitions.

What are the criteria behind the acquisitions?

[The criterion] is geography (…) or portfolio expansion. For example, we acquired Boomera, which operates in the post-consumption segment, and Biofílica, in the carbon credit segment, as a portfolio complement. We look for companies that have a very strong reputation, with good managers and executives.

We have had growth not only here in Brazil, with the acquisition, for example, of Ambipar Nordeste, but also outside Brazil, mainly in Response. We have grown a lot in North America through acquisitions.

Our great vision within an acquisition, whether in a geography or new services strategy, is the possibility of cross-selling. We look at the revenue line and look for great expansion potential not only for the acquired companies, entering our ecosystem, but also for Ambipar itself, by exploring the customer portfolios that these companies bring. This is the strategy behind the acquisitions.

Many of the latest acquisitions were concentrated in North America. Why has Ambipar invested so much in the region?

This has been going on since our IPO, in July 2020. Since then, we have been talking about this geography, which was our desire. We see an extremely dispersed and regionalized market in terms of emergency response. Ambipar created, here in Brazil, a business that has national capillarity in a country of continental dimension. So we created this standardized and fully replicable form of emergency response – so much so that we did it in Latin America. Today we are leaders in Chile and Peru, we have business in Colombia, Uruguay, in Antarctica itself through the base in Chile. We managed to create a replicable business. And we didn’t see any player with this way of looking at this vertical of response service provision in the American market. We saw that there is an opportunity and since then we have already made acquisitions in North America and we have proved that, in fact, that is how the market works there. And that there is a great possibility of doing a business very similar to what we have in Brazil. We are conquering a capillarity, already bringing the customer portfolios that these companies have, bringing reputation. We are seeing it as a great opportunity, a huge market that we can conquer the way we are doing in Latin America.

In addition to North America, are there plans to start investing more heavily in other continents?

We’ve had a UK operation since 2018, and we’ve made two acquisitions there after that. We have an expansion plan in Europe. In the very short term, that would be: Europe, North America and Latin America. But it is not ruled out, in the distant future, that we will expand to other continents.

Is there still room for acquisitions in Brazil? If yes, what is the strategy?

It has space. (…) There is still a very large market, mainly in the environment segment. So, yes, we have been looking very carefully at M&As here as well, but without neglecting organic growth. The ecosystem that we have created does indeed have very strong organic growth potential.

Does the company still have cash for acquisitions or may it need to go to market?

We have. We made some debt issues at the beginning of the year, and we are still allocating this resource. We now have a transaction with Spac, which will give us a very interesting leverage gap. And this feature is already guaranteed. So, we have a lot of resources to keep growing. Let’s not take our foot off the accelerator.

Will this also help reduce indebtedness?

Certainly. In the second quarter, we reported a leverage of 2.8 times net debt/EBITDA. With this operation, we expect to reduce to approximately 1.4x.

Is the focus still on growth and not necessarily on a normalization of the net result?

It continues to grow. We’re seeing a great opportunity, and we’re not seeing anyone looking at this service chain for the purpose that we have. So we want to do it, and do it fast, to keep sailing the blue ocean.

Ambipar has grown a lot, but the shares are still not following this advance. What do you credit this to?

I think it’s a matter of knowing the business itself. We are working hard to achieve this, strengthening the investor relations team, having more and more interactions with the market and participating in all the conferences to which we are invited, so that the market can really understand. As it is a new business on the Stock Exchange, we have the impression that, when the market really gets to know our business and its potential, the share appreciation is a natural path.

Should this also come with the maturation of these acquisitions? What is the average maturity period of the acquired companies?

We are very quick to incorporate acquisitions and start capturing synergies which, as I said, are mostly in cross-selling. That’s because we don’t buy bad companies to improve them. We buy very good companies, which already have their business, have cash generation and which, plugged into the Ambipar ecosystem, will have enormous growth potential. The captures start the day after the acquisition and continue.

Could the increase in importance of the ESG agenda also put stocks on the market’s radar?

Certainly. Today, in our shareholder base, we have many individuals, many people looking to Ambipar as a reference in ESG (acronym in English referring to actions focused on the environment, social and governance areas). It is no different from our customers, who are looking to Ambipar as a specific provider for this. We have participated in conferences and seen a lot of demand from the financial market itself, which is lacking actions that have ESG in mind. And Ambipar is one of them. We have ESG as a business.

You recently announced that you will start selling carbon credits via token. Why the decision to market this way?

It is Ambipar being a pioneer, as the company’s history demonstrates. Tokenization brings the popularization of carbon credit. Normally, these credits are traded on B2B (business to business, between companies), to which the individual ends up not having access. By tokenizing, we break down the credit from ton to kilo, making it accessible to individuals, who can neutralize their daily, weekly, monthly or annual footprint. And tokenization, via blockchain, also brings security, because it creates traceability. We use all the technology not only to popularize credit, but also to bring security to purchasers that the credit is certified and then retired.

Is it more interesting for Ambipar to sell in this way than in the more traditional market, B2B?

We have B2B too. We will not let this strategy go. We only added the pioneering spirit of bringing access to individuals.

How is the process for listing Response in New York going?

We are in the famous between the sign and the close. We are working on the documentary processes for the American Stock Exchange. The expectation is that, in mid-October, we can actually have the closing.

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