Glenwood Private Equity, a private equity fund (PEF) management company, withdrew its plan to acquire biomass power company SGC Green Power. The two companies had signed a stock purchase agreement (SPA) at the end of October and were only awaiting payment for the sale (closing), but after government support for biomass power was significantly reduced, they agreed to terminate the contract after discussions.
According to investment banking (IB) industry sources on the 23rd, SGC Energy announced on the 20th that it had withdrawn its decision to sell all shares of subsidiary SGC Green Power to Glenwood Private Equity.
SGC Energy had previously resolved in a board meeting on 30th to sell its 100% equity in SGC Green Power for 322.2 billion won to Glenwood Private Equity.
SGC Green Power operates a renewable energy power plant that generates electricity using biomass as fuel. The power plant is located in Gunsan, North Jeolla Province. It produces enough electricity to support approximately 110,000 users per hour. Parent company SGC Energy is a comprehensive energy corporation based on renewable energy, and the SGC Group belongs to the OCI conglomerate. In November 2020, Gunsan Energy, I-Tech Construction, and Samkwang Glass launched SGC through a partitioning merger.
The industry interprets that the failure of the sale of SGC Green Power is due to the government's reduction of support for biomass electricity production. According to the 'Measures for Improving the Biomass Fuel and Power Market Structure' announced by the Ministry of Trade, Industry and Energy, Ministry of Environment, and Korea Forest Service on the 18th, support for biomass electricity production is expected to decrease. It is said that the weight of renewable energy supply certification (REC) for wood pellets and chips will be adjusted downward from 1.5 this year to 0.5 by 2027.
An IB industry source noted, "I understand that both Glenwood, which was set to acquire the company, and SGC agreed that the sale is realistically difficult."