The Environmental Group Limited (ASX: EGL) is an Australian engineering company founded in 1923, headquartered in Melbourne, Victoria. The company specialises in environmental solutions, including air pollution control, water treatment, and industrial equipment services. EGL operates five business units that support industries in improving air quality, reducing carbon emissions, and enhancing waste management. As of April 1, 2025, EGL’s shares are trading at A$0.255, marking a 6.25% increase following the acquisition announcement.
Strengthening Industrial Boiler Expertise
With this acquisition, EGL is significantly enhancing its industrial boiler service and manufacturing capabilities. Advanced Boilers & Combustion is the second-largest boiler supplier in Australia, commanding an 8% market share. The company has a strong presence in Victoria, New South Wales, and Queensland, serving industries such as food and beverage, healthcare, and manufacturing.
By integrating Advanced’s expertise in fabrication, boiler fit-out, economisers, and pipe welding, EGL will be able to offer a more comprehensive range of services to its customers. The addition of Maxitherm boilers to EGL’s portfolio is also expected to bring new growth opportunities, particularly in the large-scale industrial sector, where high-efficiency water tube boilers are in demand.
Financial Strategy and Funding Arrangements
EGL is funding this acquisition through its existing cash reserves, supplemented by additional financial arrangements with Westpac. To maintain liquidity and support future growth, EGL has secured a temporary A$3 million increase in its overdraft facility, which will be in place until September 30, 2025. Additionally, the company has arranged for a permanent A$1.5 million increase in its bond facility to provide extra working capital flexibility.
The financial performance of Advanced Boilers & Combustion aligns well with EGL’s strategic vision. In FY24, the company generated A$16 million in revenue, with a normalised EBITDA of A$1.6 million. The stability of its service business, which accounts for 60% of total revenue, ensures a steady income stream that complements EGL’s existing operations.
Market Response and Future Growth Potential
The market has responded positively to this acquisition, with EGL’s share price rising 6.3% post-announcement. Trading volume surged, with approximately 1.9 million shares exchanged—more than double the 30-day average. This reflects investor confidence in EGL’s expansion strategy and the long-term value of the Advanced Boilers & Combustion acquisition.
By integrating Advanced’s manufacturing and service capabilities, EGL is positioning itself as a stronger player in the industrial boiler industry. The company’s focus on sustainability and energy efficiency aligns with global trends, which could drive further growth opportunities in the coming years. Additionally, the retention of Advanced’s key management team ensures operational continuity and expertise retention, further strengthening EGL’s market position.