Keppel units to jointly acquire South Korean waste management firm
The proposed acquisition is expected to be completed in H2 2022.
Keppel Infrastructure Trust (KIT), Keppel Asia Infrastructure Fund (KAIF), and Keppel Infrastructure (KI) proposed to jointly acquire a 100% stake in South Korean waste management company Eco Management Korea Holdings Co., Ltd. (EMK) through a special purpose vehicle (SPV) for around $666.1m.
In a joint statement, they said KIT is expected to hold 52% interest in the SPV, whilst KAIF will have a 30% stake and KI an 18% interest.
EMK is a leading player in the integrated waste management services industry in South Korea. It also has the third largest incineration capacity in the country at 404 tonnes per day with its six waste-to-energy plants and five slide drying facilities.
The South Korean firm is also the largest waste oil refiner in the country at 154 tonnes per day, and owns and manages a landfill that has the fourth largest capacity in the nation.
KIFM CEO Jopy Chiang said the acquisition of a majority stake in EMK aligned with the strategy of KIT to invest in 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. In addition, the proposed acquisition will also diversify KIT’s income geographically, enhancing the resilience of our portfolio,” he said.
The proposed acquisition is expected to be computed by the second half of 2022. The three companies will fund the acquisition in proportion to their shares in the SPV.
Keppel Infrastructure Fund Management, the trustee-manager of KIT plans to fund the investment using its internal sources of funds, equity and/or debt capital market issuances and/or external borrowings.
Upon completion of the acquisition, KIT’s assets under management will grow to $5.3b from $4.7b as of 30 June 2022.
The companies said the proposal is not expected to have any material impact on the net tangible assets per share or earnings per share of Keppel Capital and KI parent company Keppel Corporation for the current financial year.