Affirma to exit Korea waste management business
Affirma Capital – formerly Standard Chartered Private Equity – has agreed to sell EMC Holdings, a South Korea-based waste and wastewater treatment business, to a unit of local conglomerate SK Corporation.
SK Engineering & Construction will establish an acquisition vehicle – with equity capital of KRW1.23 trillion ($1 billion) – to execute the transaction. However, a filing states that the timing and size of the investment have yet to be decided. Local media reported that SK E&C would buy a 100% stake in the business for KRW1.05 trillion.
Affirma first invested in EMC in 2009 – then known as Kolon Water & Energy – paying $40 million for an approximately 40% interest. In 2016, it agreed to assume full control for a further KRW88.6 billion. The seller was Kolon Corporation, which had bought the business in 2007 but wanted to divest with a view to streamlining its portfolio and focusing on core operations.
The company was established under the Ministry of Environment in 1997 and privatized in 2001. It operates 970 sewage and wastewater treatment plants and public environmental facilities nationwide. In addition to central and municipal governments, EMC works with groups such as KCC Engineering & Construction, SK Hynix, Hyundai Steel, and various Kolom group subsidiaries.
Other business areas include construction of water and wastewater treatment plants, build-transfer-operate (BTO) projects, and environmental technology R&D.
Revenue came to KRW284.9 billion in 2019, up from KRW261.4 billion a year earlier. Over the same period, net profit rose from KRW8.6 billion to KRW15.9 billion. In the 2016 financial year – when Affirma assumed control of the business – revenue and net profit were KRW233.4 billion and KRW6.7 billion, respectively.
The Affirma team spun out from Standard Chartered at the start of 2019, taking nearly $1 billion in assets off the bank’s balance sheet. The transaction was supported by ICG Strategic Equity, a unit of Intermediate Capital Group. Affirma was allocated $700 million for new investments. The GP has $3.6 billion in assets under management, which includes assets spun out through five secondary deals between 2013 and 2015, as well as separate account mandates.
Its other Korea-based investments include equipment rental business AJ Networks, Hwasung Cosmetics, IT services player Hyundai Autoever, insurer Kyobo Life, casual dining restaurant operator MFG Korea, Samyang Packaging Corporation, Sung Gyung Food, and beef processor Sunwoo.
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