Keppel Infra-led consortium to buy Eco Management Korea for $666m

The deal is expected to support Keppel Infrastructure Trust's overall distributable income per unit accretion. ST PHOTO: LIM YAOHUI

SINGAPORE (THE BUSINESS TIMES, REUTERS) - A consortium led by Keppel Infrastructure Trust (KIT) has agreed to buy South Korea's Eco Management Korea Holdings (EMK) for 626.1 billion won (S$666.1 million) in cash.

EMK is a waste management and recycling services provider and has six waste-to-energy plants and five sludge drying facilities located across South Korea, KIT said in a statement on Monday (Aug 8).

KIT will hold a 52 per cent stake in the special purpose vehicle through which the acquisition is to be made. Keppel Asia Infrastructure Fund will hold 30 per cent, while Keppel Infrastructure Holdings - KIT's sponsor and a unit of Keppel Corp - will own 18 per cent.

"The proposed acquisition is consistent with KIT's firm focus on sustainability and commitment to a low-carbon future," it said.

In July, KIT and Keppel Corp jointly committed €160 million (S$225 million) for a combined 33.3 per cent stake in a fund, which will invest in a portfolio of existing and future onshore wind energy assets across Norway, Sweden and Britain.

EMK 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 of 1.5 million cubic m in the nation.

Once the purchase is completed, KIT's assets under management are expected to grow from $4.7 billion as at end-June to about $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.

Mr Jopy Chiang, chief executive of KIT's trustee-manager, said that South Korea is primed for companies that 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 Mr 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."

Ms 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 Ms Tan.

KIT units traded unchanged at 57 cents at 9.30am on Monday.

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