The proposed acquisition is expected to be completed in the second half of 2022.
Keppel Infrastructure Trust (KIT), Keppel Asia Infrastructure Fund (KAIF) and Keppel Infrastructure (KI) have offered to jointly acquire a 100% stake in South Korean waste management company Eco Management Korea Holdings Co., Ltd. (EMK) through a utility vehicle (SPV) for approximately $666.1 million.
In a joint statement, they said KIT is expected to hold a 52% stake in the SPV, while KAIF will hold a 30% stake and KI an 18% stake.
EMK is a major player in the integrated waste management services sector 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 blade drying facilities.
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The South Korean company is also the country’s largest waste oil refiner at 154 tonnes per day, and owns and operates a landfill that has the country’s fourth largest capacity.
KIFM CEO Jopy Chiang said the acquisition of a majority stake in EMK aligns with KIT’s strategy to invest in environmental businesses “that generate stable long-term cash flow with potential. growth, given the positive industry tailwinds for waste management in South Korea.”
“The strategic addition of this waste management platform will allow KIT to increase its revenue base and improve the resilience of its portfolio with an evergreen business. In addition, the proposed acquisition will also geographically diversify the revenues from KIT, thereby improving the resilience of our portfolio,” he said.
The proposed acquisition is expected to be calculated by the second half of 2022. The three companies will finance the acquisition in proportion to their shares in the SPV.
Keppel Infrastructure Fund Management, the trustee-manager of KIT, plans to finance the investment using its internal sources of funds, equity and/or capital market debt issuances and/or external borrowings.
Upon completion of the acquisition, KIT’s assets under management will grow from $4.7 billion as of June 30, 2022 to $5.3 billion.
The companies said the proposal is not expected to have a material impact on the net tangible assets per share or earnings per share of Keppel Capital and KI’s parent company, Keppel Corporation, for the current fiscal year.