Korean-based medical waste treatment firm ESG goes to U.S. PEF KKR

U.S.-based private equity fund operator Kohlberg Kravis Roberts & Co. (KKR) has been named the preferred bidder to win over South Korea¡¯s medical waste disposal company ESG Group.

According to the investment banking industry sources on Tuesday, the American investment firm was chosen over another U.S. fund as the No. 1 candidate to buy a full stake in ESG Co. and a 77.84 percent stake in ESG Cheongwon from Hong Kong-based PEF Anchor Equity Partners.

The deal is expected to close at around 850 billion won ($771.9 million) in total, industry sources estimate.

KKR is said to have beaten Stonepeak Infrastructure Partners, an U.S. infrastructure fund manager.

KKR also took part in the tender for Korean Environment Technology and Saehan Environment, both waste treatment companies that went to IS Dongseo and E&F PE.

Anchor Equity Partners bought ESG Cheongwon in 2016 at 60 billion won and took over other medical waste treatment firms as part of a ¡®bolt-on¡¯ acquisition, a strategy aimed at enhancing corporate value of an acquired firm by buying other companies engaging in the same business, to establish ESG Group.

The Hong Kong PEF that invested 180 billion won in acquiring ESG and the other waste management firms is expected to reap about four times bigger profits through the sale.

The Korean M&A market for the waste disposal companies has defied the coronavirus-induced slowdown thanks to the huge growth potential. Several big name PEFs around the world joined the heated race for ESG despite its heavy price tag, according to sources.

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