이 기사는 2021년 05월 31일 07시14분 thebell에 표출된 기사입니다

Taeyoung Group and global private equity (PE) firm KKR are expected to create a waste management giant with revenue of 800 billion won ($717 million) by combining three businesses – ESG Co, ESG Cheongwon and TSK Corp, if the deal closes.

KKR and Taeyoung Group are likely to own around 51% and 49% each of the combined company, according to sources. TY Holdings, the holding company of Taeyoung Group, is expected to be the largest shareholder with the management rights of the combined entity, with KKR being the second largest shareholder.

The deal is reportedly being led by KKR, the largest shareholder of TSK Corp, as part of the PE firm’s exit strategy, which is also likely to have a positive impact on TSK Corp’s planned initial public offering (IPO).

The merge of TSK Corp, ESG Co and ESG Cheongwon is likely to help the new company achieve economies of scale as the three companies are engaged in various environmental businesses including waste and water treatment.

Combining the three companies can also enhance the new company’s operational efficiency while a possible IPO can be carried out more smoothly.

In June 2020, KKR bought 100% of ESG Co and 77.84% of ESG Cheongwon from Anchor Equity Partners through a special purpose vehicle called Easel SPV in a deal worth 875 billion won. Shortly after the transaction was completed, KKR also purchased a 37.39% stake in TSK Corp for 440.8 billion won from minority shareholders.

TSK Corp is 62.61% owned by TY Holdings. Before the investment by KKR, the remaining 37.39% was held by SK E&C (16.70%), Huvis Corp (16.52%) and SK Discovery (4.17%).

TSK Corp was founded in 2010 as a joint venture between Taeyoung Group and SK Group, with SK E&C having held the second-largest stake in the company for the past 10 years. However, SK decided to unload its shareholdings in TSK Corp after signing a deal to buy another waste management company, EMC Holdings, from Affirma Capital last year over concerns about antitrust regulatory review.

TSK Corp posted revenue of 504.4 billion won in 2018, 654.4 billion won in 2019 and 700.6 billion won in 2020 on a consolidated basis, maintaining year-on-year growth rates of 20~30%. Its net profit has increased from 27.9 billion won in 2018 to 45.5 billion won in 2020.

ESG Corp recorded revenue of 23 billion won and ESG Cheongwon posted revenue of 64.8 billion won in 2020, which makes the combined entity the waste management giant with revenue of 800 billion won. (Reporting by Si-eun Park)