Two East of England companies have formed a multimillion pound new joint venture company to build more anaerobic digestion (AD) plants around the UK and internationally to process food waste and produce renewable energy.

Kier is a world-renowned construction company based in Sandy while Biogen (UK) Limited designs, builds and operates large-scale AD plants.

Kier's maximum total investment is £24.375 million (comprising a mixture of preferred and ordinary equity), of which £5.375m was invested on completion.

A further £2.5m of equity will be invested in December and another £2.5m in July 2013. The remaining £14m is scheduled to be invested in instalments over the next four years to finance new AD plants.

Biogen, which was established by Bedfordia Group plc in 2005, currently owns and operates two large commercial AD plants in the UK (both of which are included in the joint venture) and, in conjunction with Kier, plans to build a number of further plants in strategic locations to serve the requirements of local authorities, food retailers, food manufacturers and commercial waste providers to the food and retail industries.

The joint venture will enhance Kier's environmental business by providing intelligent solutions for the treatment of food waste and complements the Pure recycling business which Kier acquired in 2010.

Biogen's existing management and operational team, including its chief executive, will remain with the business. The management team has been granted options over Biogen's shares which are intended to ensure their continued long-term involvement in the business.

Kier says there is significant demand for new AD plants across the UK, with seven million tonnes of food waste being produced per annum and current AD capacity of only 2.5 million tonnes, resulting in a need for a further 100 plants. Following an initial investment phase, Kier expects the return on capital to exceed 15 per cent and for the business to be operating nine plants by 2017.

Paul Sheffield, chief executive of Kier Group plc, said: “The investment again demonstrates Kier's strategy of developing intelligent solutions for our clients and also our commitment to the ‘green’ agenda. We see significant potential in an attractive market for the development of the business in the coming years.”