|Seen is YIDO's sewage management facility in Incheon. Courtesy of YIDO|
By Park Jae-hyuk
KKR is in talks with YIDO to acquire around a 50 percent stake in the Korean property management company for around 200 billion won ($180 million), according to industry sources and media reports, Thursday.
Considering that YIDO has been focusing on the waste management sector lately, the latest negotiation is interpreted as part of KKR's efforts to increase environmental investments here.
Last year, the global private equity firm (PEF) became the second-largest shareholder of TSK by taking over a 37.39 percent stake in the local sewage management firm for 440 billion won from SK E&C, Huvis and SK Discovery. This deal was signed a few months after KKR acquired controlling stakes in Eco Solution Group and its affiliate, ESG Cheongwon, for around 800 billion won from Anchor Equity Partners.
What matters for the YIDO deal at this moment is the fact that its founder and CEO Choi Jung-hoon wants to be guaranteed control over his company. This has been mentioned as the main reason for Macquarie Asset Management quitting its attempts to buy YIDO shares earlier this year.
Choi is the largest shareholder of YIDO with a 45 percent stake, and people close to him reportedly own another 13 percent. KKR is said to be considering acquiring around 40 percent of YIDO from IMM Investment, Dominus Investment and Mirae Asset and also grabbing an additional 10 percent stake.
If both sides reach an agreement, the Korean market can emerge as the foothold in Asia for KKR's investments taking into account the environmental, social and corporate governance (ESG) criteria.
The PEF has been paying close attention to the Asia-Pacific region including Korea. Within the past three months, it closed a $15 billion Asian Fund IV focused on investments in private equity transactions across the region, $3.9 billion Asia Pacific Infrastructure Investors Fund and a $1.7 billion Asia Real Estate Partners Fund.
"Over the last 16 years we have strategically built our Asia-Pacific platform and diverse regional team to unlock what we believe are some of the most compelling investment opportunities in the world given the Asia-Pacific's growth and dynamism," KKR Asia Pacific Head Ming Lu said in a statement. "Our new flagship private equity fund meaningfully adds to our multi-asset platform and strengthens our investment position across the region."