This article was published on May 27, 2025, at 4:58 p.m. on the ChosunBiz MoneyMove site.
The Korea Electric Power Corporation is pushing to sell its stake in a power plant in Jordan as part of an effort to reduce liabilities exceeding 200 trillion won. Last year's competitive bidding for the acquisition failed, so this time it is possible to switch to a negotiated contract method.
According to investment banking (IB) industry sources on the 27th, KEPCO has begun the process of selecting advisory firms for the sale of its minority stake in the Jordan power plant, targeting domestic securities companies and accounting firms. Participation is limited to those with experience in mergers and acquisitions (M&A) advisory for power plants over the past three years. This follows the expiration of the contract with the previous advisory firm, Samjong KPMG.
The Jordan Al-Qatrana power plant is a gas combined cycle facility with a capacity of 373 megawatts, in which KEPCO holds an 80% equity stake. The remaining 20% is held by Saudi Arabia’s Genel. The total investment at the time was $461 million, and it has been in operation since 2011. KEPCO and Genel control the Al-Qatrana gas combined cycle power plant through their holding company Al-Qatrana Holdco, based in Bahrain. The sale involves 29% of the 80% equity stake held by KEPCO.
KEPCO's subsidiary, KEPCO KPS, is mentioned as a strong potential buyer. Previously, KEPCO KPS selected Anjin Accounting Corporation as the advisory firm for the acquisition of the Jordan power plant stake last year and initiated local due diligence. As of the first quarter of this year, KEPCO KPS holds cash and cash equivalents amounting to 132.6 billion won. Including accounts receivable that can be liquidated immediately, the total current assets exceed 1 trillion won, suggesting sufficient funding for the acquisition.
KEPCO has reportedly left hints related to the selection of advisory firms in the request for proposal (RFP) for this sale. KEPCO requested 'criteria for determining an appropriate transaction price in transactions with related parties' as one of the required contents for the proposal. This phrase is the only one written in bold among the requirements for the advisory firms.
The reason KEPCO is putting effort into valuing the enterprise is interpreted as considering the acquisition possibilities of subsidiaries like KEPCO KPS. Especially now that the sale method has shifted from competitive bidding to negotiated contracts, determining a 'fair price' is the most crucial situation. Unlike competitive bidding, where multiple buyers negotiate over the price, negotiated contracts allow transactions to proceed without competition with a specific party.
Since this will occur through transactions between affiliates, failure in valuation measurement may lead to legal risks. If the equity stake in the Jordan power plant is traded at too high a price, KEPCO KPS could be embroiled in a controversy over breach of trust, and conversely, if it is sold too cheaply, it could be interpreted as a breach of trust on KEPCO's part. As both KEPCO and KEPCO KPS are publicly traded companies, if the sale occurs at an unreasonable price, there is a possibility of facing backlash from shareholders.
An industry official noted, 'After last year's failure of the sale of Hyosung Chemical's specialty gas division, the most important consideration for KEPCO TNC when reviewing the acquisition of management rights was the appropriate valuation,' adding, 'If a lopsided transaction occurs, it could lead to management breach of trust, as well as unfair support issues under fair trade laws.'