Carlyle, Keppel, Gaw Capital, IMM vying for Ecorbit

Carlyle Group, Temasek-backed Keppel Corp., Gaw Capital Partners, and a consortium of IMM Investment and IMM Private Equity have been selected as final bidders for South Korea's largest landfill company Ecorbit Co., according to people with knowledge of the matter on Monday.

A deal to sell the 50:50 joint venture between KKR & Co. and TSK Corp., a sewage management company under debt-ridden Taeyoung Group, is expected to bring in up to 3 trillion won ($2.2 billion).

The four shortlisted bidding groups will carry out due diligence on Ecorbit as early as this month before making binding offers.

Its preliminary bidders included North Asia-focused MBK Partners and US-based investment firm Stonepeak.

Ecorbit has been put on the market as part of Taeyoung Group's self-rehabilitation plans after the conglomerate filed for debt workout in December last year. It plans to complete the sale within the year.

The 100% stake in Ecorbit is estimated between the low 2 trillion won range and 3 trillion won, or about 10 times its forward earnings before interest, taxes, depreciation and amortization (EBITDA) of 250 billion won.

In 2023, its EBITDA stood at 225.0 billion won, with consolidated sales of 674.4 billion won.

UBS and Citigroup are managing the sale.

Ecorbit's steady cash flows have drawn interest from Carlyle, which has been lukewarm on Korean deals over the past few years.

For Keppel, in which Singapore’s state investor Temasek is the largest shareholder, Ecorbit could become its second investment in a Korean waste management company after its 760-billion-won purchase of EMK in 2022. The deal marked its largest ever transaction in South Korea.

The auction for Ecorbit comes as Hong Kong-based Gaw Capital, with $35.9 billion in assets under management, looks to beef up infrastructure investment in Asia beyond real estate.

In April this year, it appointed Cho HyunChan as its head of Korea and infrastructure as well as its managing director. He had previously led IMM Investment’s infrastructure investment division.

Given the estimated high price tag, IMM PE formed a consortium with its infrastructure investment affiliate IMM Investmentn to vie for Ecorbit.

Other private equity firms have snatched up domestic landfill companies as increases in waste and high entry barriers bolster their business outlook.

In March, Affirma Capital signed a memorandum of understanding to acquire Jentec, a leading landfill operator, for an undisclosed sum. It was understood to value the Korean landfill operator at 500 billion won.

Last month, VL Investment, a Seoul-based private equity firm with a focus on environmental and energy companies, signed a definitive agreement to buy 100% of K Eco, a smaller landfill company. The deal size is estimated at 90 billion won.

Write to Jun-ho Cha at chacha@hankyung.com

Yeonhee Kim edited this article.