This article was published on April 24, 2025, at 3:30 p.m. on the ChosunBiz MoneyMove site.
The sale of SK Eco Plant's environmental subsidiary, valued at 2 trillion won, is flowing into a two-way contest between the global private equity fund (PEF) operator Kohlberg Kravis Roberts & Co. (KKR) and the domestic PEF operator STIC Investments, with KKR's loss of trust among domestic financial institutions due to the 'Axel Group incident' expected to be a variable.
According to the investment banking (IB) industry on the 24th, SK Inc., the major shareholder of SK Eco Plant, has confirmed that KKR and STIC Investments participated in the recent preliminary bidding for SK Eco Plant. There remains room for additional bids, but no operators are showing significant movement at this time.
The sale target includes a 75% equity stake in the environmental management subsidiary Renewus (formerly Environmental Facility Management) and a 100% equity stake in Daewon (formerly Daewon Green Energy). Considering that the capital of both companies is approximately 720 billion won, with earnings before interest, taxes, depreciation, and amortization (EBITDA) of 120 billion won, the sale price is estimated at around 2 trillion won.
KKR is reported to have made a higher bid than STIC. When using infrastructure funds, the decision likely stemmed from the fact that the target revenue would be relatively lower than that of a buyout fund.
However, due to the aftermath of the Axel Group incident at the end of last year, major domestic financial institutions could take a passive approach to collaborating with KKR, which is considered a key variable.
Domestic financial institutions, including Shinhan Investment Corp., participated as a part of the financing consortium for KKR's acquisition of the European bicycle manufacturer Axel Group in 2022. About 2 billion euros (27.5 trillion won) of the acquisition financing was raised domestically.
The problem arose when the Axel Group's performance deteriorated just one year after acquisition, leading KKR to request the financing consortium to forgive part of the existing debt. KKR initially sought a 70% debt reduction, causing conflicts with the consortium, but a compromise was reached on a 40% reduction.
The sudden and unusual request from KKR has significantly lowered domestic financial institutions' trust in KKR. In fact, KKR was eliminated from the overseas infrastructure investment consortium project conducted by Korea Post at the end of last year.
An IB industry official explained, “From the perspective of investors (LPs), there are many overseas operators yielding similar revenue, so they would likely not want to invest in KKR, which had previously lost trust.”
Another IB industry official noted, “The sentiment among financial institutions, including banks, towards KKR has not been good since the Axel Group incident, and it seems unlikely that KKR will garner a positive response even if they attempt another acquisition financing.”