(Yicai Global) June 7 -- China Tianying will sell Urbaser, a Spanish urban solid waste collection company that the Chinese firm acquired three years ago, to a special purpose acquisition company formed by a fund founded by California-headquartered Platinum Equity for EUR1.5 billion (USD1.8 billion) to rake in big gains.

The deal will bring Tianying considerable funds for its business development, the Jiangsu province-based firm, whose market value is less than CNY13 billion (USD2 billion), said in a statement yesterday.

The Chinese company's debt-to-asset ratio will drop dramatically after the transfer, it said. Goodwill will decline to CNY40 million (USD6.3 million) from CNY5.6 billion.

Urbaser posted CNY18.2 billion in revenue last year, making up more than four-fifths of that of its parent. Its net assets accounted for about half of the parent's total.

Tianying, which incinerates waste to generate energy, acquired all of the Madrid-based firm's equity for CNY8.9 billion (USD1.4 billion) in 2018 in the Chinese waste management sector's largest overseas acquisition to date.

The purchase helped Tianying master advanced technologies and management systems in sanitation while building its international brand and making breakthroughs in Vietnam and Singapore, the statement added.

Urbaser was a big fish for Tianying to acquire. The Spanish company reported over CNY10 billion in revenue in 2018, about eight times that of Tianying.

China’s urban waste management market has huge potential as the country's 14th Five-Year Plan, which ends in 2025, includes goals involving waste collection, sorting, and transport, Tianying added.

Tianying's stock price [SHE:000035] dropped 3.2 percent to CNY4.86 (80 US dollar cents) by noon.

Editor: Emmi Laine, Xiao Yi