Domestic private equity fund (PEF) manager IMM Private Equity (PE) and IMM Investment have filed a damages lawsuit worth around 100 billion won, saying they suffered massive losses at Ecorbit, a waste treatment company that global private equity firm Kohlberg Kravis Roberts (KKR) sold.
According to the investment banking (IB) industry on the 22nd, IMM last week filed a damages suit against KKR with the Seoul Central District Court. IMM is said to claim that KKR did not provide a proper opportunity for due diligence during the sale process and failed to properly disclose the distressed situation.
Earlier, in December last year, IMM acquired 100% equity in Ecorbit for 2.07 trillion won from KKR and Taeyoung Group holding company TY Holdings. Then, in February this year, immediately after the change in control, Ecorbit subsidiary Ecorbit Green Cheongju was hit with a one-month business suspension and fines of 5 million won by Cheongju, North Chungcheong Province. The leachate level exceeded the legal standard of 5 meters, raising the possibility that nearby soil or groundwater could be contaminated.
When the leachate issue surfaced, IMM immediately applied to the court to provisionally seize the account of KKR's special purpose company (SPC), and the court granted it, leaving a substantial portion of the KKR sale proceeds still tied up in Korea, according to reports. The industry is watching closely the first head-to-head between the No. 1 homegrown private equity consortium and a major global private equity firm.