KDB Capital under state lender Korea Development Bank has acquired an aluminum recycling company in partnership with local private equity fund (PEF) Harvest Equity Partners as part of its efforts to expand its ESG portfolio.
According to the investment bank on Wednesday, the newly established Harvest Equity Partners created a fund with KDB Capital to purchase a 100 percent stake in DS Liquid for 130 billion won ($90.31 million) along with another local PEF, AVES Partners.
DS Liquid - established in 2005 – processes aluminum waste and reproduces it as aluminum raw material. Its operating profit more than doubled to 12.8 billion won last year from 5.4 billion won in 2020. It revenue jumped more than 40 percent to 107.3 billion won from 75.7 billion won during the same period.
The aluminum recycling company’s earnings before interest, taxes, depreciation and amortization (EBITDA), which is used to assess a company’s market value, came to 26 billion won last year. Its new investor, KDB Capital-Harvest Equity Partners consortium, is expecting EBITDA to reach 40 billion won this year, up 1.5 times from last year.
The acquisition of DS Liquid is largely regarded as part of KDB Capital’s efforts to expand ESG investments in line with the global eco-friendly movement. Just this month, KDB Capital was one of the investors of Woori Private Equity-led consortium’s 140 billion won investment in Hanwha Energy’s Australian business which operates renewable energy such as solar energy.
The recycled raw materials market is expanding worldwide with the global recycled aluminum market growing at a rate of 3 to 5 percent every year over the past decade.
Polices from around the world such as the European Union’s new Battery Regulation which sets a minimum requirement for the amount of recycled raw materials in batteries and the U.S. Inflation Reduction Act (IRA) which limits the usage of critical minerals from China, are also expected to boost raw materials recycling businesses across the world.
By Park Chang-young and Susan Lee
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