이 기사는 2021년 06월 01일 08:00 thebell 에 표출된 기사입니다.

KKR & Co and Taeyoung Group plan to get a 1 trillion won ($900 million) debt financing for their deal to merge three waste management companies, with competition heating up among securities firms and banks hungry for large-scale acquisition financing opportunities.

ESG Cheongwon and ESG Co, which are owned by the US private equity firm, will be combined with Taeyoung Group’s TSK Corp to create a waste management giant in a deal that was first reported by thebell last week.

The combined company, which will be owned 50% each by KKR and Taeyoung Group, will provide comprehensive waste management services including water treatment, incineration and landfill.

TY Holdings, the holding company of Taeyoung Group, is the largest shareholder of TSK Corp, with a 62.61% stake. The remaining 37.39% stake was purchased by KKR from minority shareholders including SK E&C, Huvis and SK Discovery, in December 2020 for 440.9 billion won, of which 224.8 billion won was funded by loans.

The deal followed KKR’s August acquisition of ESG Cheongwon and ESG Co from Anchor Equity Partners in a deal worth 875 billion won, of which 244.9 billion won was raised in debt financing.

KKR plans to repay the loans taken out to finance the two deals prior to the planned merger. Instead, the combined company will raise 1 trillion won worth of debt financing, according to sources.

This is attracting strong attention from local securities firms and lenders, which have been hungry for large-scale acquisition financing opportunities this year. They may also feel comfortable with the combined company’s infrastructure-like characteristics, compared to deals involving platform companies with a lot of intangible assets, which recently dominated the South Korean mergers and acquisitions market.

KKR and Taeyoung Group have reportedly been approached by several financial services firms about their proposed terms of financing. KKR and Taeyoung Group is said to be seeking an interest rate in the 3% range.

Some expect that firms that helped KKR in its previous two deals may have an advantage. Shinhan Investment and KB Securities arranged debt financing to back KKR’s minority stake purchase in TSK Corp, and Hana Bank and Mirae Asset Securities provided loans to fund the acquisition of ESG and ESG Cheongwon. (Reporting by Hee-yeon Han)