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Affirma Capital issues teaser for EMC The waste company’s unique business structure touted by the PE firm as a key advantage

Translated by Ryu Ho-joung 공개 2020-04-16 08:00:04

이 기사는 2020년 04월 16일 08:00 더벨 유료페이지에 표출된 기사입니다.

South Korea’s private equity firm Affirma Capital is speeding up the sale of its waste management company EMC Holdings.

Affirma Capital, which put EMC up for sale a month ago, has sent out a teaser for a sale of the business to interested potential buyers, sources familiar with the matter said on April 9. Citigroup Global Market Securities and Standard Chartered Securities have been mandated as lead managers, with the first round of bidding expected to take place in mid-May.

The sell side is running a marketing campaign to attract more bidders, putting an emphasis on the company’s competitive edge as an integrated platform of environmental management services.

Some industries, including private equity and construction, have recently seen a growing interest in waste management companies, leading to more deals in the sector. But the domestic market has not been consolidated and thus is highly fragmented, so the majority of waste companies put up for sale were either small in size or serving limited regions of the country. According to the seller, however, EMC is different from them in terms of both the business structure and operating regions.

By service, the waste management market includes water treatment, incineration, landfill and waste oil treatment. Most of the domestic waste companies provide only one of these services – or two through business combinations. For instance, TSK Corp., a major waste management company in the country, carries out water management and landfill operations, while Korea Environment Technology (Koentec), another waste company put up for sale, provides incineration and landfill services.

By contrast, EMC, which initially started as a water treatment company, has expanded its services to all four areas of waste management through its aggressive growth strategy. This unique business structure of the company is one of the advantages the seller emphasizes.

EMC, with its more than 20 years of history, is the number one company in the domestic water treatment market. It has 970 water treatment facilities, which represents the highest number among its peers and a wide margin of about 200 facilities over the number two company. In areas of incineration and landfill, EMC holds the third place in terms of incineration capacity and the remaining landfill capacity, respectively.

The company’s nationwide network is another advantage that a potential buyer could enjoy. EMC provides water treatment services across many regions, including Youngnam, Honam and Chungcheong areas as well as Seoul and metropolitan areas. It has four incinerators – three installed in Seoul and metropolitan areas and one installed in the Gyeongbuk Province. It also plans to increase landfill capacity, adding to existing landfill services serving customers in Youngnam and Honam areas.

These advantages of the company could bring other benefits. For example, a potential buyer could gain the upper hand by having comparable information about service costs and price through the company’s nationwide network. This also could help to build a closer relationship with local governments of each region.

(By reporter Han Hee-yeon)
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