Buyout firms build appetite for waste managers in Korea

Waste treatment center Ecorbit Energy Gyeongju situated in Gyeongju, North Gyeongsang Province (Ecorbit)

Overseas private equity firms are increasingly eyeing to acquire a stake in waste management companies here, in an attempt to expand their footprint in the environmental sector.

Swedish investment company EQT announced Friday that it is set to acquire the local plastic recycler KJ Environment and its affiliates through a stock purchase agreement.

EQT is a Stockholm-based buyout firm with 246 billion euros ($272 billion) in total assets under management. The deal, reportedly worth around 1 trillion won ($750 million), is to be closed within this year.

KJ Environment and its affiliated companies are leading players in the plastic recycling market in Korea in terms of treated volume, with stable access to plastic waste feedstock and technology to produce advanced recycled plastics, the company explained.

While the buyout firm’s existing portfolio consisted of companies that engage in waste-related business in other countries such as the US and Ireland, KJ Environment was the first Korean company in the sector to be acquired by EQT.

Its previous engagement in the country was the acquisition of SK Shieldus, a security unit under SK Group.

“EQT will help establish a scaled and diversified end-to-end waste treatment platform with a focus on circular economy infrastructure,” it said.

Another eye-catching deal on the market is the sale of Korea’s largest landfill company Ecorbit.

The company, established through a joint venture between US private equity giant KKR and Taeyoung Group, the parent company of debt-ridden Taeyoung Engineering & Construction, was put on the block for debt restructuring.

Three contenders emerged in the final bid that closed on Aug. 9, including American megabuyout fund Carlyle Group, a union of Singapore-based Keppel Infrastructure and Hong Kong-based Gaw Capital Partners, and a consortium of local investors IMM Investment and IMM Private Equity.

Ecorbit is the largest landfill company in the country, expected to weigh in at over 2 trillion won. With its business spanning from waste incineration to water treatment, the company's earnings before interest, taxes, depreciation and amortization is expected to reach 250 billion won this year.

Keppel Infrastructure has been paying close attention to waste management businesses here. It acquired Eco Management Korea, a waste disposal company, for 770 billion won in October 2022.

The buyout firm is likely to eye a bolt-on acquisition with Ecorbit, meaning it could seek to expand its existing business with an additional takeover.

“More equity funds are eyeing the waste management industry, as it is expected to continuously grow,” an official from a local private equity firm said.

“Also, limited partners, especially institutional investors, are very conscious about the environmental, social and governance impact of their contributed capital. Having a waste manager on the fund portfolio can satisfy the partners.”

By Im Eun-byel(silverstar@heraldcorp.com)