SK Ecoplant to invest $80 mn in Malaysia for SE Asia biz

South Korea’s top waste management company SK Ecoplant Co. is set to expand its business in Southeast Asia with an $80 million investment in Malaysia.

The unit of South Korea’s No. 2 conglomerate SK Group said on Friday it signed a share purchase agreement (SPA) with the Malaysian government’s sovereign wealth fund Khazanah Nasional Berhad to buy a 30% stake in Cenviro Sdn Bhd. Khazanah currently holds a 100% stake in Cenviro.

SK Ecolant has yet to unveil the value of the investment, but it is known to be injecting 100 billion won ($80 million) into Cenviro for 30% of its new shares, investment banking industry sources said.

“Based on this strategic partnership, the two companies plan to use Malaysia as a hub for the Southeast Asian environmental market and expand the business to Singapore and Indonesia,” said an SK Ecoplant official in a statement.

The company also eventually aims to make inroads into the sector in developed markets such as North America and Europe.

Earlier this year, the South Korean company took over Singapore-based electronic waste disposal and recycling firm TES Envirocorp Pte. Ltd for $1 billion, expanding its waste treatment services beyond incineration and landfills.

EXPANDING WASTE TREATMENT BUSINESS

Cenviro, headquartered in Kuala Lumpur, is Malaysia’s first integrated waste management company founded in 1991. It operates facilities for incineration, treatment of wastewater and leachate, as well as electronic waste through three subsidiaries.

Cenviro, which stands for Clean Environment, is the only company in the country that handles both the downstream segments including incineration and reclamation, as well as the upstream areas such as recycling and reuse.

Given its stable business based on such integrated operations, SK Ecoplant had to fiercely compete with global investors for the stake purchase, sources said.

“SK Ecoplant could win the deal as its global expansion with a takeover of TES earlier this year drew attention in the country,” said an IB industry source.

SK Ecoplant started the environmental business by acquiring South Korea’s largest waste treatment company EMC Holdings Co. for around 1 trillion won from Affirma Capital.

Last year, it took over six environmental companies in South Korea to become the local leader in the water treatment and waste incineration sectors, as well as the No. 3 player in the waste landfill industry. The company is also known to be considering more acquisitions of overseas companies in eco-friendly sectors.

SK Ecoplant has been working on an initial public offering with an aim to list on the country’s main bourse Kospi next year. It has selected three bookrunners and two co-lead managers.

The company’s target corporate value was estimated at around 10 trillion won, industry sources said.

Write to Jun-Ho Cha and Si-Eun Park at chacha@hankyung.com
Jongwoo Cheon edited this article.