This article was published on Dec. 24, 2024, at 5:08 p.m. on the Chosun Biz Money Move (MM) site.
It has been confirmed that the domestic private equity fund (PEF) management firm IMM Private Equity (PE) and the IMM Investment Consortium (hereinafter referred to as the IMM Consortium) declined investment from the Qatar Investment Authority (QIA), a sovereign wealth fund of Qatar, during the process of completing the EcoBit transaction. There appear to have been disagreements during the process of setting the management fees.
According to the investment banking (IB) sector on the 24th, the IMM Consortium acquired EcoBit, the country’s largest waste management company, from Taeyoung Group's holding company TY Holdings and global PEF operator KKR for 2.07 trillion won on the 13th. This comes about four months after the stock purchase agreement (SPA) was signed in August.
Of the 2.07 trillion won acquisition fund, the IMM Consortium raised 300 billion won through a co-investment fund (Coin Bay Fund). The remaining amount was sourced from acquisition financing of 1.2 trillion won and about 500 billion won from a blind fund (a fund with unspecified investment targets). The Coin Bay Fund refers to a fund created for the purpose of co-investing in corporations that another operator's fund has already decided to invest in.
The QIA, a sovereign wealth fund of Qatar, also expressed interest in investing in the IMM's Coin Bay Fund, but the negotiations on detailed terms with the IMM Consortium fell through. In particular, it seems that both sides had differing views on management fees. It is also interpreted that QIA’s status as a non-limited partner in the IMM Consortium's blind fund affected the negotiations.
It is reported that the consortium had established criteria to give priority to the Coin Bay Fund investment for the limited partners (LP) of its blind fund. QIA did not participate as an LP in IMM PE's 'Rose Gold No. 5' or IMM Investment's 'Infrastructure No. 9' funds.
An IMM official noted, "The priority for the Coin Bay Fund investment proposal is with the current fund contributors," adding, "QIA made efforts to negotiate regardless of the order, but ultimately did not reach an agreement."
Industry insiders say that QIA showed willingness to execute up to 300 billion won. QIA, one of the world's top 10 sovereign wealth funds, has assets under management (AUM) of about $526 billion (about 700 trillion won). It appears that QIA attempted to invest due to the perception that the risk was lower, as it had already made an investment decision in EcoBit through prior verification with IMM PE, IMM Investment, and their contributors.
Some in the industry expressed regret that the IMM Consortium may have missed an opportunity to broaden its connections with significant investors. An IB industry source said, "If QIA had been accepted as a Coin Bay Fund investor, the probability of QIA investing in a future blind fund would have increased," adding, "There is a sense of regret wondering how it would have been if they had shown flexibility with a longer-term view."