EQT to acquire KJ Environment to expand into South Korea’s waste management sector

EQT Infrastructure VI has announced a significant expansion into South Korea’s waste management sector through a definitive agreement to acquire KJ Environment and its affiliated companies. This move, executed in partnership with Genesis Private Equity, is set to create a prominent waste treatment platform focused on plastic recycling and waste-to-energy solutions.

Strategic Expansion in South Korea

EQT’s acquisition of KJ Environment will integrate a comprehensive portfolio covering the full spectrum of waste treatment operations. This includes advanced capabilities in recyclable waste sorting, plastic recycling, and waste-to-energy technology. The Platform operates from strategically located sites within the Greater Seoul Metropolitan Area, which serves over 50% of South Korea’s population and economic activity. This geographical positioning enhances the Platform’s ability to manage a substantial portion of the country’s waste and recycling needs.

A Leader in Plastic Recycling

KJ Environment stands out as a leading player in South Korea’s plastic recycling industry. It processes a significant volume of plastic waste and employs cutting-edge technology to produce high-quality recycled plastics suitable for use in food and beverage products. This capability aligns with the growing global demand for sustainable materials driven by stricter regulations and increased voluntary commitments from the private sector. South Korea’s advanced sorting infrastructure is crucial in this process, as it ensures that all recyclable waste is efficiently aggregated and processed before being sent to recycling facilities.

EQT’s Strategic Investment in Climate-Related Infrastructure

The acquisition marks EQT’s second infrastructure investment in South Korea, underscoring its commitment to climate-related infrastructure opportunities. EQT Infrastructure VI’s approach is aligned with the global trend towards enhancing resource efficiency and promoting a circular economy. The investment will provide capital and operational support to KJ Environment, including the introduction of automated machinery and digital solutions aimed at boosting efficiency and expanding customer partnerships.

Sang Jun Suh, Partner in the EQT Infrastructure Advisory Team, expressed enthusiasm about the partnership, noting EQT’s extensive experience in sustainable waste and recycling solutions. He highlighted that this investment will leverage EQT’s local expertise and industrial network to elevate KJ Environment to a market-leading position in waste treatment. Suh emphasized that South Korea’s market holds significant potential, reinforcing the strategic importance of this investment in EQT’s regional strategy.

Ongoing Investment and Regional Strategy

EQT has been active in South Korea since 2009, viewing the market as a key component of its Asia Pacific strategy across infrastructure, private equity, and real estate investments. The acquisition of KJ Environment further enhances EQT’s portfolio, building on its track record of supporting infrastructure companies in the Asia Pacific region. Since 2020, EQT Infrastructure has committed approximately EUR 5 billion in equity, including co-investment, to companies in this region, with a focus on sustainability and digitalisation.

Transaction Details and Advisory

The transaction is anticipated to close in the fourth quarter of 2024, pending customary conditions and regulatory approvals. EQT’s advisory team includes JP Morgan for financial matters, Kim & Chang for legal issues, and PwC for financial and tax consulting. Post-transaction, EQT Infrastructure VI is expected to be 45-50% invested, factoring in closed and/or signed investments and public offers.

Enhanced Waste Management Capabilities

KJ Environment’s state-of-the-art facilities include advanced plastic sorting systems and proprietary recycling technologies that cater to high-quality plastic feedstock. The company’s ability to produce recycled plastics meeting stringent food-grade standards is particularly noteworthy. This capability is increasingly important as global regulations around recycled plastic use become more stringent and consumer demand for sustainable products rises.

Global Trends and Market Impact

The global market for recycled plastics is expanding rapidly due to both regulatory pressures and voluntary corporate sustainability goals. South Korea, with its robust waste management infrastructure, is well-positioned to benefit from these trends. The acquisition by EQT not only enhances the capabilities of KJ Environment but also reinforces South Korea’s position as a leader in waste management and recycling technologies.