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This article was published on the ChosunBiz MoneyMove site on Feb. 26, 2025, at 4:50 p.m.

Domestic major private equity fund (PEF) operators are actively pursuing acquisitions of environmental-related corporations, such as waste management and water treatment companies. This is interpreted as a bright outlook due to the growing importance of eco-friendliness globally and the stable characteristics of the infrastructure industry amid uncertain economic conditions.

According to the investment banking (IB) sector on the 26th, SK Eco Plant is in contact with major domestic and international PEFs regarding the sale of its eco-friendly subsidiaries Renewus (formerly Environmental Facility Management) and Renewon (formerly DAEWON Green Energy). (Related article☞[Exclusive] ‘Improving financial speed’ SK Eco Plant has also brought out the card for selling water treatment specialist Renewus)

Renewus is a water treatment and waste management company that was previously owned by the PEF Apalma Capital. SK Eco Plant acquired Renewus for 1.05 trillion won in 2020 and merged it with eight waste landfill subsidiaries acquired for 825.6 billion won by 2022, including DAEWON Green Energy. The expected sale price for Renewus and Renewon is reported to be around 2 trillion won.

Recently, major PEFs have been eyeing environmental-related corporations. The largest merger and acquisition (M&A) in Korea in 2024 was also a waste company. The IMM Consortium, including IMM Private Equity (IMM PE) and IMM Investment, acquired EcoBit, the country's top waste company, for 2.7 trillion won on Dec. 2, 2024. EcoBit was half-owned by TY Holdings, the holding company of the Taeyoung Group, and KKR, and was put up for sale during the restructuring process of the Taeyoung Group.

Glenwood Private Equity signed a 260 billion won stock purchase agreement (SPA) to acquire the water treatment subsidiary of Bubang Group in November 2024. The acquisition target includes three entities: Techros Environmental Services, Bugok Environment, and Techros Water and Energy's Chinese subsidiary. Previously, Bubang Group selected Samjeong KPMG as its sale advisor and continued contact with multiple buyers, during which competition among key PEFs, including Apalma Capital, was intense.

EcoBeat's final disposal work on waste in Changwon. /Courtesy of EcoBeat

The owner of the largest waste recycling company in Korea is also a PEF. EQT Partners, a PEF affiliated with the Swedish Wallenberg family, signed an SPA with Genesis PE to acquire KJ Environment for 1 trillion won in August 2024. In addition to KJ Environment, EQT Partners plans to acquire 16 companies that Genesis PE sequentially bought since 2020, turning them into subsidiaries of KJ Environment. Among them is the industrial waste company Cheongsong Industrial Development.

Apalma Capital formed a consortium with Deham Partners and acquired the waste landfill company J&Tech in September 2024. J&Tech has the largest remaining waste landfill capacity in the country, with an estimated corporate value of about 500 billion won. This consortium also acquired the chemical waste recycling company Gwangjin Chemical in 2023. In addition, in 2016, Apalma Capital acquired management rights of Kolon Water Energy, which centered on water treatment, and has subsequently acquired six waste companies to become a comprehensive environmental corporation.

There are several reasons why PEFs focused on profitability are paying attention to environmental-related corporations. First, industries such as waste management and water treatment must operate with government approval, creating high barriers to entry. It's challenging for new competitors to emerge, allowing stable operations. Additionally, the global importance of eco-friendliness continues to grow, ensuring a guaranteed growth trend.

An industry insider noted, “The waste recycling sector is scattered across the nation in small-scale operations, making it suitable for employing the 'Bolt-on' strategy by acquiring similar companies to achieve economies of scale,” adding, “Above all, even in a downturn, people continue to throw away trash and use water, making it one of the few sectors that can maintain steady revenue amid increasing uncertainties.”

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