Eco Green Holdings sold at higher valuation multiple

Eco Green Holdings, part of Anchor Equity Partners’ South Korean waste management portfolio, has been sold at a higher multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) than its peers.

Hong Kong-headquartered private equity firm Anchor Equity Partners has signed an agreement to sell 80 percent of Eco Green Holdings to U.S. buyout firm KKR for more than 800 billion won ($672 million), sources said on June 10.

Anchor Equity Partners founded Eco Green Holdings as a holding company after its first bet on the country’s waste sector with the acquisition of ESG Cheongwon in 2016. The company has become what it is today through bolt-on acquisitions. It holds several waste management businesses including ESG Co Ltd, ESG Cheongwon and ESG Gyeongju.

Eco Green Holdings owns 100 percent of ESG Co Ltd and 77.84 percent of ESG Cheongwon, while these two subsidiary companies hold the stakes of all other waste companies in Anchor Equity Partners’ portfolio. The remaining 22.16 percent stake in ESG Cheongwon is held by ESG Co Ltd.

Eco Green Holdings’ peer Korea Environment Technology (Koentec) also changed hands recently. Macquarie Korea Opportunities Management (Macquarie PE) agreed on June 4 to sell Koentec to a consortium of IS Dongseo and E&F Private Equity reportedly at a multiple of about 14 times the company’s 2019 EBITDA.

If this valuation multiple is applied to Eco Green Holdings’ latest EBITDA of about 35 billion won, the company’s value is roughly estimated at 490 billion won which is far less than the actual acquisition price. The difference suggests that there are factors specific to Eco Green Holdings that can justify a higher multiple than its peers.

One of those factors is its new acquisition of a waste company earlier this year, a move in line with Anchor Equity Partners’ strategy to increase waste treatment capacity by bolt-on investments. The newly acquired company is allegedly expected to generate EBITDA of about 10 billion won which was not reflected in Eco Green Holdings’ financial performance last year.

Eco Green Holdings also holds a competitive edge over peer companies placed on the market because its business areas not only include construction waste management but also medical waste management. Medical waste businesses held by Eco Green Holdings reportedly had a combined market share of 42 percent in the country based on processing capacity.

There is room for the company’s market position to rise further as Eco Green Holdings is said to have obtained approval to develop new landfills. This can lead to an increase in its waste treatment capacity and market share. (Reporting by Heeyeon Han)

Hong Kong-headquartered private equity firm Anchor Equity Partners has signed an agreement to sell 80 percent of Eco Green Holdings to U.S. buyout firm KKR for more than 800 billion won ($672 million), sources said on June 10.

Anchor Equity Partners founded Eco Green Holdings as a holding company after its first bet on the country’s waste sector with the acquisition of ESG Cheongwon in 2016. The company has become what it is today through bolt-on acquisitions. It holds several waste management businesses including ESG Co Ltd, ESG Cheongwon and ESG Gyeongju.

Eco Green Holdings owns 100 percent of ESG Co Ltd and 77.84 percent of ESG Cheongwon, while these two subsidiary companies hold the stakes of all other waste companies in Anchor Equity Partners’ portfolio. The remaining 22.16 percent stake in ESG Cheongwon is held by ESG Co Ltd.

Eco Green Holdings’ peer Korea Environment Technology (Koentec) also changed hands recently. Macquarie Korea Opportunities Management (Macquarie PE) agreed on June 4 to sell Koentec to a consortium of IS Dongseo and E&F Private Equity reportedly at a multiple of about 14 times the company’s 2019 EBITDA.

If this valuation multiple is applied to Eco Green Holdings’ latest EBITDA of about 35 billion won, the company’s value is roughly estimated at 490 billion won which is far less than the actual acquisition price. The difference suggests that there are factors specific to Eco Green Holdings that can justify a higher multiple than its peers.

One of those factors is its new acquisition of a waste company earlier this year, a move in line with Anchor Equity Partners’ strategy to increase waste treatment capacity by bolt-on investments. The newly acquired company is allegedly expected to generate EBITDA of about 10 billion won which was not reflected in Eco Green Holdings’ financial performance last year.

Eco Green Holdings also holds a competitive edge over peer companies placed on the market because its business areas not only include construction waste management but also medical waste management. Medical waste businesses held by Eco Green Holdings reportedly had a combined market share of 42 percent in the country based on processing capacity.

There is room for the company’s market position to rise further as Eco Green Holdings is said to have obtained approval to develop new landfills. This can lead to an increase in its waste treatment capacity and market share. (Reporting by Heeyeon Han)