EastBridge beats KKR, TPG to buy Korean waste disposal firm

South Korea-based EastBridge Partners has agreed to acquire a majority stake in the country's waste treatment firm YIDO for around 260 billion won ($232 million), which had drawn interest from KKR, TPG and Macquarie, as well.

On Apr. 21, EastBridge signed a memorandum of understanding to buy a 60% stake in YIDO, according to investment banking sources. Under the deal, the private equity firm is taking over a 40% stake from financial investors, including Seoul-based PEFs Dominus Investment and IMM Investment. The remaining 20% will be from new shares to be issued.

The transaction will dilute the ownership by its top shareholder and Chief Executive Choi Jung-hun and make him the No.2 shareholder. Choi will remain CEO of the unlisted company valued at 330 billion won by EastBridge.

EastBridge outmaneuvered global rivals in terms of pricing and proposals to create synergies between YIDO's businesses, the sources said.

YIDO was launched in 2014 as an operation and management company of large office buildings, tunnels and roads. Through a series of acquisitions, it has diversified into construction waste disposal and water treatment businesses, as well as infrastructure. Last month alone, it acquired three small Korean companies, including an industrial waste treatment firm.

Last year, it jumped to the golf club management service. YIDO envisions an eco-friendly waste management company by developing environmentally-friendly treatment solutions for waste, waste water and renewable energy. Its revenue surged to 147.2 billion won in 2019, compared to 28.6 billion won in 2016.

It had attracted interest from several global PEFs as it began to embrace the environmental, social and governance standards.

In the second half of last year, YIDO held negotiations with Macquarie Korea Asset Management Co. for an extended period, but the talks broke down. Since then, KKR, TPG and EastBridge tapped the Korean company to invest.

EASTBRIDGE'S NEW BLIND POOL FUND

The deal marks EastBridge's first investment in a waste management company, beyond its focused areas of materials, components and equipment makers.
It has recently raised 250 billion won in the first close of its third blind pool fund, the first investment of which was the 200 billion won into SK Telecom Co.'s mobility spin-off.

EastBridge boasts a strong network with sovereign wealth funds in the Middle East which has participated in its funds as limited partners. The emerging markets-focused PEF was founded by Lim Jung-gang who had worked at Seoul-based STIC Investments in 2011.

Since 2017, EastBridge has been headed by Choi Dongsuk, an ex-Goldman Sachs' Korean investment banking co-head and a cousin of SK Group Chairman Chey Tae-won. Its investments included CoAsia Corp., a system semiconductor company; CS Bearing Co., a wind energy bearing manufacturer; and Innometry Co., a rechargeable battery company. 

Write to Chae-Yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article.