SK Group is divesting the waste management and water treatment operations of its construction affiliate SK Ecoplant Co. to US private equity firm KKR & Co. for 1.7 trillion won ($1.2 billion), marking a retreat from an ambitious expansion that failed to generate expected returns.
The South Korean conglomerate’s board will approve Tuesday the sale of a 75% stake in water-treatment provider Renewus Co. and the entirety of waste processor Renewon Co., according to people familiar with the matter. The transaction reflects SK’s broader effort to shed underperforming assets as it refocuses on semiconductors and advanced technologies.
The deal price falls significantly short of SK’s initial 2.5 trillion won target, underscoring weak market appetite for the assets. KKR emerged as the sole serious bidder after rival STIC Investment withdrew from the auction, forcing SK to lower expectations to the mid-1 trillion won range.
SK Ecoplant’s aggressive acquisition spree since 2020 has burdened the company with mounting debt. The firm spent over 4 trillion won acquiring 15 environmental companies, including the 2020 purchase of EMC Holdings for 1.5 trillion won. Interest payments alone reached 320 billion won annually in both 2023 and 2024.
The divestiture comes as SK Ecoplant faces pressure from private equity investors who provided 1 trillion won in funding during 2021-2022, contingent on a public listing by 2026. The waste management venture has failed to create meaningful synergies with the company’s core construction and energy businesses, while debt-to-equity ratios have soared above 400%.
For KKR, the acquisition expands its presence in Korea’s fragmented waste management sector, where the firm previously created and sold Ecorbit for approximately 2 trillion won.
