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Treasury & Capital Markets
Keppel expands into Korean waste management
Acquisition of evergreen business grows income base, improves portfolio resiliency
The Asset 8 Aug 2022

Keppel Infrastructure Fund Management (KIFM), the trustee-manager of Keppel Infrastructure Trust (KIT), Keppel Asia Infrastructure Fund (KAIF) and Keppel Infrastructure Holdings (KI) are jointly acquiring, through a special purpose vehicle (SPV) to be established, a 100% stake in South Korean waste management company Eco Management Korea (EMK) for 626.1 billion won (US$480 million) .

KIT will hold a 52% interest in the SPV, while KAIF and KI will hold a 30% and 18% interest respectively. The acquisition is expected to be completed by 2H 2022. KIT, KAIF and KI will fund the proposed acquisition in proportion to their shareholdings in the SPV.

EMK is a leading integrated waste management services player in South Korea, serving the national market. Operating six waste-to-energy plants and five sludge drying facilities, EMK has the third-largest incineration capacity in the nation. It is also the largest waste oil refiner in South Korea and manages and owns a landfill, which has the fourth-largest capacity in the nation.

Waste management is an essential service for sustainable urbanization and achieving liveable cities. The current trajectory for global waste generation, according to a World Bank report, shows that it will grow from 2.24 billion tonnes in 2020 to nearly 3.88 billion tonnes by 2050. This rapid growth in waste generation underscores the urgency and the high demand for sustainable waste management solutions. South Korea also has been implementing more stringent environmental regulations, which drives the growth in demand for more waste management solutions.

“With the increased emphasis on promoting a circular economy, South Korea is primed for companies which can support their vision of sustainable urbanization,” says Jopy Chiang, CEO of KIFM. “Therefore, the acquisition of a majority stake in EMK is in line with KIT’s strategy of investing in good-quality environmental businesses that generate long-term stable cash flows with the potential for growth, given the positive sectorial tailwinds for waste management in South Korea. The strategic addition of this waste management platform will enable KIT to grow its income base and improve portfolio resiliency with an evergreen business.”

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