SCPE to buy controlling stake in Korea's Kolon Water & Energy

Kolon Corporation, KWE's parent company, said in a regulatory filing that it would sell a 62.6% stake in the business as part of wider efforts to streamline its portfolio and focus on core assets. SCPE already has a minority interest in the business, having paid $40 million for an approximately 40% holding in 2009, when KWE was known as Environmental Facilities Management Corporation.

The company was established under the Ministry of Environment in 1997 and then privatized in 2001 as an employee-owned company. Kolon Group - for which listed entity Kolon Corp. is the holding company - bought the business in 2007. It manages wastewater treatment facilities of national industrial complexes, social overhead capital projects and municipalities, boasting a more than 30% market share.

KWE's net profit came to KRW6.7 billion for the 2016 financial year, down from KRW7 billion in 2015. Sales fell to KRW233.4 billion from KRW239.3 billion over the same period.

"KWE has established strong market positions in the fast-growing water treatment industry. KWE's services align closely to Standard Chartered's commitment to support industries that enhance the community's wellbeing. We are excited about the company's continued growth in its core O&M [operations & maintenance] business," said Taeyub Kim, a Korea-based managing director at SCPE, in a statement.

Kolon Corp's other businesses include auto parts, fashion and fabrics, biopharmaceuticals, property and construction, environmental service, and retail. Despite rising sales, the company posted a net loss of KRW75.7 billion for the year ended December 2015, compared to a net profit of KRW20.5 billion in 2014. KWE's energy assets have already been spun-off into a separate entity, leaving the sewage and wastewater treatment operations.

SCPE is the private equity arm of Standard Chartered Bank. It is preparing to tap external LPs for the first time, with a $1 billion-plus Asia, Africa and Middle East fund expected to launch this year. Existing investments have been made from SCPE's balance sheet, although third party capital was brought into these deals through a series of secondary transactions over the last three years.

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• Topics
• North Asia
• Buyouts
• Infrastructure
• Cleantech
• Standard Chartered Private Equity
• South Korea