KIT trustee-manager, sponsor and Keppel Asia Infra Fund to acquire South Korean waste company for 626.1b won
Sharanya Pillai
THE trustee-manager of Keppel Infrastructure Trust (KIT), the trust’s sponsor, as well as Keppel Asia Infrastructure Fund (KAIF) and a co-investor, are fully acquiring Eco Management Korea Holdings (EMK), a South Korean waste management company, for 626.1 billion won (S$666.1 million).
KIT will hold a 52 per cent stake in the special purpose vehicle through which the acquisition is to be made, it announced in Monday’s (Aug 8) pre-trade hours. KAIF will hold 30 per cent while Keppel Infrastructure Holdings (KI) – KIT’s sponsor and a unit of Keppel Corp – will own 18 per cent.
EMK is an integrated waste management services player in South Korea, serving the national market. It operates 6 waste-to-energy (WTE) plants and 5 sludge drying facilities.
The company has the third-largest incineration capacity of 404 tonnes per day in the country. It is also South Korea’s largest waste oil refiner, handling 154 tonnes per day. The landfill it manages and owns has the fourth-largest capacity in the nation of 1.5 million cubic metres.
The acquisition is expected to be completed by H2, with KIT, KAIF and KI funding it in proportion to their shareholdings. KIT’s trustee-manager intends to fund the investment with a combination of internal funds, equity, debt capital market issuances or external borrowings.
Once the purchase is completed, KIT's assets under management is expected to grow from S$4.7 billion as at end-June to about S$5.3 billion. The deal is expected to support KIT’s overall distributable income per unit accretion, but not to have any material impact on Keppel Corp’s earnings per share for the current financial year.
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Jopy Chiang, CEO of KIT’s trustee-manager, said that South Korea is primed for companies which can support sustainable urbanisation.
“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,” said Chiang.
“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.”
Christina Tan, CEO of KAIF’s parent Keppel Capital, noted that this will be the fund’s first environmental investment since its launch in January 2020.
“As a leader in the South Korean waste management market, EMK will be a strong addition to our portfolio. We are confident that EMK, a company providing essential services, will deliver strong and sustainable returns to our investors,” said Tan.
Cindy Lim, CEO of KI, hopes to “synergise with EMK, through Keppel Seghers’ leading WTE technology, to complement its growth in the South Korean market”.
Units of KIT closed flat at S$0.57 on Monday, following the announcement.
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