Lodestone PE Invested in Waste Management and EV Components Industries

Private equity firm Lodestone Private Equity (Lodestone PE) is drawing industry attention with successive investments in the waste management and electric vehicle (EV) components sectors.

KRW 10 Billion Investment in KG ETS Highlights Growth Potential in Environmental Industry

Lodestone PE recently acquired private bonds worth KRW10 billion from waste management company KG ETS, completing the investment with call option rights. Through this investment, Lodestone PE secured a 5.46% stake in KG ETS. The company operates in waste incineration and steam sales, new materials (copper oxide), and bio (bio-distillation) sectors, with a particular strength in medical waste management.

KG ETS is pursuing business expansion through synergies with KG Dongbu Steel and recorded KRW 160 billion in sales in 2023, with KRW 70 billion in sales and KRW 11 billion in operating profit in the first half of 2024. Lodestone PE decided on this investment, noting the steady growth of the waste management industry and the potential for market expansion due to tightening environmental regulations.

KRW10 Billion Investment in Shinchang FA to Capitalize on Expanding EV Market

Additionally, Lodestone PE invested KRW 10 billion in Shinchang FA, a manufacturer of automated production lines for EV battery systems and motors. The firm acquired redeemable convertible preferred shares (RCPS) and convertible bonds (CB), securing a 22% stake upon conversion, making it the second-largest shareholder.

Shinchang FA counts Hyundai Mobis among its major clients, and its order volume has been increasing with the expansion of the EV and hybrid vehicle markets. This investment aims to support the company’s order growth and capital expenditures. With its expertise in motor automation line technology, Shinchang FA is well-positioned to adapt flexibly to changes in the EV and hybrid markets.

Strategic Investments Highlight Lodestone PE’s Focus on Environmental Industry M&A

Lodestone PE is investing in companies across diverse industries with growth potential and stable revenue structures, particularly expanding investments in environmental and energy-related businesses. The firm aims for high profitability and sustainability in line with the ESG (Environmental, Social, and Governance) trend.

The environmental industry has recently become a 'hot' sector in the M&A market. In addition to KG ETS, mergers and acquisitions of environmental companies such as EMC Holdings, Koentec, Saehan Environment, and Eco Green Holdings are actively underway. This reflects the growing global focus on stricter environmental regulations and sustainable growth.

Synergy Expected Between KG ETS and Shinchang FA

The industry is closely watching how much synergy Lodestone PE’s investment in KG ETS will generate between KG ETS and KG Dongbu Steel. Furthermore, as Shinchang FA’s IPO plans take shape, attention is on how Lodestone PE’s exit strategy will unfold.

Seoul Tribune (c)

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