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VL Investment invites local institutional investors to buy full stake in Japanese waste...

Collected: 2016.04.01

Distributed: 2016.04.04

Source: Go Direct

South Korean private equity fund (PEF) VL Investment will join hands with local institutional investors to take over a Japanese waste management and disposal company at 15 billion won ($13 million). It would be the first foreign waste management company Korean PEFs have ever acquired when it buys it.

According to investment banking sources on Thursday, VL Investment is recruiting local institutional investors to jointly invest in a 100 percent stake of Eco Japan, a medium-sized waste treatment company that owns a waste landfill on a site of 1.3 million cubic meters in Fukuoka.

Each of seven institutional investors, including Shinhan Investment Corp., Hana Financial Investment Co., KDB Capital Corp., Shinhan Capital Co. and KT Capital Co., will chip in the fund with an expected annual return of 20% over the next three to five years.

VL Investment has decided to acquire the stake, citing steady demand for management and disposal of various kinds of waste such as residential and industrial waste. The business requires government approval, creating high entry barrier, so it is often an attractive investment target.

In particular, as the landfill of the Japanese company has more than 90 percent of the remaining capacity, it would not be difficult to resell the company few years later. Asset value of a waste management firm hinges on the remaining capacity of landfill sites because the business is over when the landfill is fully loaded.

By Song Gwang-sup

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