SK E&S will acquire a 100% stake in thermal power generation services company Busan Jungkwan Energy for approximately 20 billion won ($18 million) as part of a strategy of creating synergies in its cogeneration and collective energy businesses.

The subsidiary of South Korean conglomerate SK Group was selected as a preferred bidder and has almost completed due diligence on the company, industry sources said on Friday (December 4). The deal is subject to approval by the Ministry of Trade, Industry and Energy.

Located at Kijang-gun in northeastern Busan, Busan Jungkwan Energy is a private cogeneration power plant which offers electricity transmission, electricity distribution, power transformation, and other related services. The company’s revenue increased from 27.8 billion won in 2013 to 39.2 billion won in 2019, thanks to an increase in the number of residents and commercial facilities in the Jungkwan area.

Industry sources said SK E&S has been named as the preferred bidder as it has a track record of running cogeneration and collective energy businesses. The company is operating its collective energy business in nine districts nationwide.

SK E&S reportedly plans to apply for ministry approval soon. (Reporting by Ik-hwan Choi)