Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Waste management companies grow more attractive to private equity funds
Sanitary workers recycle waste at a disposal site located in Yongin last October. Korea Times photo by Choi Won-suk
By Anna J. Park
By Anna J. Park
Waste management companies appear to be growing more attractive for profit-seeking private equity funds (PEFs), not only due to their indispensable roles in the consumer-oriented environment, but also by coinciding with the environment, social and governance (ESG) criteria for measuring sustainability, which is becoming crucial in attracting investments.
The latest deal that has caught the attention of market watchers was waste disposal business Eco Management Korea (EMK)'s recapitalization, raising the firm's secured debt to 370 billion won ($327 million) from 110 billion won. Recapitalization is a financial investment method that raises new capital by borrowing additional secured loans from banks. Through the process, initial investors can take back their principal, while the remaining debt will be paid when the business is sold at a higher price.
Through the successful capital restructuring deal led by venture capital firm IMM Investment and state-run Korea Development Bank (KDB)'s private equity department, EMK's corporate value has risen to about 800 billion won ($709 million), roughly doubling from the firm's value assessed in 2017.
IMM Investment purchased EMK for around 400 billion won in early 2017, and KDB's PE department joined the funding deal as a General Partner (GP), operating and managing investors' capital in the fund. Market watchers estimate that the corporate value of EMK, which operates over 10 local waste management firms and services ranging from collection to energy recycling, could rise further, to one billion won, in the next few years.
Another case illustrating lucrative gains by private equity firms investing in local waste disposal businesses, was SK Engineering & Construction's acquisition last September of EMC holdings, Korea's biggest waste management firm.
Private equity firm Affirma Capital sold its full stake in EMC Holdings to SK E&C for 1.05 billion won, amid heated competition among bidders. Given that the waste disposal firm's corporate value stood at around 125 billion won when Affirma Capital decided to invest, the private equity firm gleaned more than an eight-fold profit in just four years.
SK Group bought the waste management corporation after anticipating that Korea's waste disposal market could grow into one of the most profitable businesses in the future, in addition to their positive social implications for ESG investments, particularly from a sustainable development perspective.