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Waste management

Goldman, Keppel Infrastructure, SK Eng vying for top Korean waste disposal firm

Aug 10, 2020 (Gmt+09:00)

South Korea’s largest waste treatment company EMC Holdings Co. Ltd. has drawn binding bids from Goldman Sachs Principal Investment Area (PIA) Group, Singapore’s Keppel Infrastructure Holdings and three other bidders by the August 7 deadline.

SK Engineering & Construction Co. Ltd. is the only identified Korean participant in the final round of bidding, in a deal estimated to be worth over 1 trillion won ($842 million), according to investment banking sources. The two other final bidders have not yet been identified.

EMC Holdings, 100% owned by Affirma Capital, had attracted about 15 non-binding bidders, including MBK Partners, which were whittled down to five. All the five shortlisted bidders participated in the final round after conducting on-site due diligence for a month.

The prospective deal will wrap up the sale of the three foreign-owned South Korean waste treatment companies on the market this year. Two of them, owned by Anchor Equity Partners and Macquarie respectively, were sold to KKR & Co. and a South Korean consortium for around 850 billion won and 500 billion won, respectively, or more than 10 times EBITDA.

EMC Holdings is a combination of seven Korean entities and runs around 2,000 sewage and wastewater treatment facilities across the country. It also operates four waste disposal facilities and a garbage incineration plant.

Affirma Capital, formerly known as Standard Chartered PE, will likely see a return of around three times its investment in EMC, four years after it secured the management rights in 2016.

Rising waste volumes and higher garbage disposal prices underpin the robust outlook for waste management companies in the consolidating market. Further, high entry barriers to the regulated industry means a limited supply of treatment facilities.

Compared with other industries struggling with the effects of the coronavirus pandemic, waste treatment firms have lower sensitivity to economic cycles and generate a steady stream of cash flow. Their bidders are expecting to improve the value of the target companies through bolt-on acquisitions in still the fragmented market.

Net profits at EMC Holdings increased almost five-fold to 22.2 billion won in 2019 from a year before, with revenues up 10% to 380.9 billion won. Its EBITDA came to 82.2 billion won last year.

Citiglobal Markets and Standard Chartered are handling the sale of EMC Holdings.


Meanwhile, Hana Financial Investment Co. Ltd. is planning to raise 105 billion won in a private investment vehicle to construct a portfolio of four waste disposal facilities in South Korea.

For the project it has teamed up with Singapore-based waste infrastructure developer Equis Development and private equity firm Genesis Management.

Hana will commit 10 billion won to the vehicle, which targets an internal rate of return of 20%. The new fund will invest in a special purpose company (SPC) to be established by Genesis Management. Then the SPC and Equis will set up a 9:1 holding company in charge of the construction for which the initial development costs are expected to be around 290 billion won.

In June, Macquarie Korea Opportunities Management Ltd. sold its 59% stake in Korea Environment Technology Co. Ltd. (Koentec), along with the 100% holding in Saehan Environment Co. Ltd. to a consortium of Seoul-based E&F Private Equity and a domestic construction materials company. French water and waste management utility Veolia was the only foreign participant in the competition for Koentec and Saehan.

Write to Seonpyo Hong at

Yeonhee Kim edited this article

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