This article was posted on ChosunBiz MoneyMove (MM) at 4:39 p.m. on Oct. 20, 2025.
Attention is focusing on why IS Dongseo, which together with domestic private equity firm E&F Private Equity (PE) acquired waste incineration company Koentec, is not participating in the Koentec acquisition. Typically, when a strategic investor (SI) and a financial investor (FI) jointly acquire a company, it is common for the SI to secure a right of first refusal on the asset.
On the 20th, sources in the investment banking (IB) industry said the E&F PE–IS Dongseo consortium closed its main bids on the 4th and is evaluating prices and transaction structures by bidder. The sell-side advisers aim to select a preferred negotiating party within the year based on proposal evaluations by UBS and EY Hanyoung and to sign a stock purchase agreement (SPA).
The sale has been narrowed to a three-way contest between IMM PE, the Affirma Capital–The Hahm Partners consortium, and Hong Kong-based GeoCapital. IS Dongseo, the sell-side SI, is likely to hold a right of first refusal. However, IS Dongseo is believed to lack the capacity to buy Koentec, whose corporate value has risen, because it is facing funding difficulties.
The market values Koentec at about 700 billion won. Assuming acquisition of half of the 59.29% stake being sold, more than 200 billion won would be required. In contrast, IS Dongseo had only 331.3 billion won in cash and cash equivalents as of June.
A delayed mixed-use residential and commercial development project worth about 3.5 trillion won lowers IS Dongseo's acquisition capacity. IS Dongseo purchased land of about 32,000 pyeong (106,300 square meters) in the Jungsan district of Gyeongsan, North Gyeongsang, for 400 billion won to secure the project site, but it postponed sales to next year. The move came as concerns about unsold units grew amid a downturn in the Daegu–North Gyeongsang real estate market.
A source in the IB industry said IS Dongseo is facing a liquidity crisis after failing to recoup its investment in the Jungsan district sales project, and that its in-house mergers and acquisitions (M&A) team has been disbanded, so it is not in a position to acquire Koentec.
Another source in the IB industry explained that because IS Dongseo is likely to have the right of first refusal, if the bidders offer satisfactory prices they can sell and exit, and if not, it won't be too late for IS Dongseo to decide then whether to acquire.
It is uncertain whether the bidders submitted prices that would satisfy IS Dongseo. They see the fact that Koentec's customers are limited to SK Energy and SKPIC Global as a risk factor. Koentec's main business is steam (thermal energy) sales based on an industrial waste incineration facility in the Ulsan area. It recovers waste heat generated during incineration to produce steam and supplies it to manufacturers in nearby petrochemical complexes.
Moreover, because the asset has already passed through the hands of a PE firm, some say there is limited room to raise corporate value. Another source in the IB industry said that land expansion through permits carries great uncertainty, and that selling prices are beyond what an operator can control, so there appear to be no factors likely to raise corporate value.
E&F PE formed a consortium with IS Dongseo in 2020 to acquire a 59.29% stake in Koentec for 420 billion won. It later secured 100% through a tender offer and share exchanges and completed delisting. Founded in 1993, Koentec listed on the KOSDAQ in June 2004. Last year, sales were about 80.5 billion won and operating income was 30.5 billion won.