KKR & Co. Inc. (KKR) is reportedly in talks to own half of South Korean waste treatment firm Yido Co., which would make the global private equity giant’s third major ESG investment in the country in a year.

KKR is going after a combined 40 percent stake held by Yido’s financial investors including IMM Investment, Dominus Investment and Mirae Asset Financial Group, according to industry sources on Wednesday. The private equity firm is separately approaching minor investors to own a comfortable 50 percent in the waste treatment firm. It reportedly budgets 200 billion won ($179 million) to 300 billion won for the acquisition.

Yido, established in 2014, is a waste management company that processes domestic, industrial and construction waste. Its business spans from recycling waste for renewable energy generation to purifying domestic sewage and industrial wastewater for reuse. It also has been providing golf course management service since 2018.

The company reported 147.2 billion won in sales on a consolidated basis for full 2019, doubled from a year earlier. Its revenue in 2020 is believed to have grown 20 percent.

Yido’s largest shareholder is Choi Jung-hoon, president and chief executive officer, holding a 45 percent stake.

Yido had sought investment from another global investor Macquarie in the second half last year, but the deal did not go through due to differences on price terms.

Yido stakeholders and KKR are said to be nearing an agreement.

KKR recently closed $15 billion for its Asia-focused private equity fund. When combined with its previous funds, it has raised $24 billion for investment in infrastructure and real estate across Asia Pacific so far this year.

The investment firm sees the region to offer “some of the most compelling investment opportunities in the world” given its “growth and dynamism,” according to Ming Lu, head of KKR Asia Pacific.

KKR’s latest investment focus in Korea has been the environment sector.

The firm purchased a full stake in medical disposal company ESG Group and a 77.8 percent stake in construction waste disposal firm ESG Cheongwon at around 850 billion won in June 2020. Four months later, it acquired a 37 percent stake in TSK Corporation, a water sewage treatment company with annual revenue of over 700 billion won, for 440.8 billion won and became the second largest shareholder.

Other private equity funds also have been active making investments in the environmental sector amid growing investor demand for environmental, social and corporate governance (ESG) products.

Seoul-based VL Investment recently acquired a Kospi-listed construction waste management firm for 50 billion won. SG Private Equity and SKS Private Equity jointly bought a stake in a local waste collection and transport company.

Affirma Capital made fat profits by selling its full stake in EMC Holdings, the No. 1 waste management firm in Korea, at 1.05 trillion won to SK Engineering & Construction Co. last year. The private equity had acquired EMC Holdings at 55 billion won.

By Kang Doo-soon, Park Chang-young and Cho Jeehyun

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