E&F PE, Diversifying Investment Portfolio and Accelerating Exits

E&F Private Equity (E&F PE), a domestic private equity fund (PEF) management company, is actively accumulating investment exit (divestment) results and accelerating the diversification of its investment portfolio. After facing setbacks in major institutional investor (LP) funding projects last year, the firm recognized the limitations of its waste management-focused investments and is now implementing a strategy to expand into various industries.

Leadership Change and Investment Strategy Shift

According to industry sources, E&F PE transitioned to a co-CEO system at the beginning of this year by appointing Kim Yoo-jin and Lee Seung-ho as co-CEOs, replacing the previous sole leadership of Im Tae-ho. Former CEO Im has moved into an advisory role while also serving as the full-time CEO of Inus, a portfolio company, to lead business operations and value-up strategies.

Both Kim and Lee are founding members of E&F PE and seasoned PEF experts, having previously worked at Sam-il PwC, Mirae Asset Securities, A.T. Kearney Korea, and NH Investment & Securities PE Division. The leadership transition is believed to have been influenced by the firm’s failure to secure a general partner (GP) position in major institutional funding programs last year, including those by the Korea Development Bank (KDB) Growth Support Fund, Export-Import Bank of Korea, and Korea Growth Investment Corporation.

Moving Beyond Waste Management: Investment Diversification

Since its establishment in 2014, E&F PE has been a key player in the waste management industry. Through its first blind fund, the firm invested in companies such as Daewon Green Energy, Saehan Environment, and Yeongheung Industrial Environment, achieving an internal rate of return (IRR) of 15%. However, in recent years, the firm has struggled with significant exit results, highlighting the need for investment diversification.

In response, E&F PE has actively expanded its investments beyond waste management. Last year, the firm acquired Halla Encom, a ready-mix concrete and stone mining company, for KRW 100 billion and also invested in Naver Z, the operator of the metaverse platform ‘Zepeto’. From 2024 onward, the firm plans to diversify its portfolio further by targeting AI and other emerging industries.

Accelerating Exits: Sales of Koentec and Iconix in Progress

E&F PE is also ramping up efforts to exit its investments. Last year, the firm put Cenotec up for sale to maximize returns on its buyout investments. Additionally, Koentec, a waste management company jointly acquired with IS Dongseo, is undergoing a delisting from KOSDAQ before being put up for sale.

Notably, Iconix (the animation studio behind ‘Pororo’) and Eco Cube Lab (an eco-friendly waste management company), both part of E&F PE’s minority stake portfolio, are preparing for IPOs. If successfully listed, these IPOs are expected to yield significant exit returns for the firm.

Preparing for a Third Blind Fund: Future Growth Potential

E&F PE has almost fully deployed the capital from its second blind fund, which was raised in 2021 with a total size of KRW 530 billion. The firm is now preparing to launch its third blind fund, but rather than setting a target amount or final closing timeline, it aims to first strengthen investor confidence by securing solid exit results before proceeding with fundraising.

An industry insider stated,

" E&F PE has built a strong track record in the waste management sector. If the firm successfully expands its investment portfolio into AI, metaverse, and other emerging industries, it will gain a stronger position in future fundraising efforts.”

With a dual strategy of maintaining its expertise in waste management while expanding into diverse industries and executing well-planned exits, E&F PE’s next moves are drawing significant attention from the industry.

Seoul Tribune (c)

#E&F #E&FPE #PriviateEquity #SeoulTribune