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SK E&S picks KKR as preferred buyer to buy new shares KKR offers highest bid of $2.02 bil

Translated by Kim So-in 공개 2021-10-19 08:08:35

이 기사는 2021년 10월 19일 08:04 더벨 유료페이지에 표출된 기사입니다.

Global private equity (PE) firm KKR & Co has been selected as the preferred buyer for SK E&S' redeemable convertible preferred shares (RCPS) thanks to its highest bid.

South Korea's largest city gas supplier has picked KKR as the preferred buyer to purchase its RCPS worth 2.4 trillion won ($2.02 billion) and plans to sign a contract later this month, industry sources said on Friday.

The deal has drawn strong interest from several PE firms including KKR as it is seen as an infrastructure investment instead of an ordinary equity investment via a share issuance.

KKR has beaten other contenders as it reportedly offered the highest bid of 2.4 trillion won. The PE firm emphasized the possible synergy between its existing waste management company and SK Group's hydrogen business and the possibility of global joint investments.

“The city gas is not a loss-making business, but it is difficult to make significant growth, either,” a source familiar with the deal said. “The key to this deal is that SK E&S will prefer a partner that can maximize its additional growth through the new business and KKR seems to have emphasized the point.”

SK E&S has teamed up with U.S. fuel cell maker Plug Power to establish a joint venture company and build a factory to produce key components for the hydrogen business in the Seoul metropolitan area by 2024. The joint venture will distribute liquid hydrogen produced by SK E&S to about 100 charging stations nationwide.

The link between SK E&S and KKR is the hydrogen business and the waste management business. KKR bolstered its portfolio of waste management in South Korea last year by acquiring ESG Co and ESG Cheongwon for 875 billion won from Anchor Equity Partners. Shortly after the transaction was completed, KKR bought a 37.39% stake in TSK Corp for 440.9 billion won from minority shareholders.

The latest deal has reportedly been led by Joseph Bae, Co-Chief Executive Officer at KKR. He joined KKR in 1996 and served as Co-President and Co-Chief Operating Officer from 2017 to 2021. (Reporting by Ha-na Suh)
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