This article was displayed on the ChosunBiz MoneyMove (MM) site at 6:13 a.m. on Dec. 19, 2025.
Private equity fund (PEF) manager E&F Private Equity (E&F PE) will sell Koentec shares, which it bought for 9,000 won per share and voluntarily delisted, for about double in half a year. By simplifying the transaction structure through a block sale of equity and removing the obligation to protect minority shareholders, it was able to secure an additional 180 billion won in revenue.
E&F PE previously carried out a tender offer and open-market purchases, and even conducted a comprehensive share swap, to delist Koentec in June. Shareholders who viewed Koentec's outlook positively and wanted to keep holding the stock over the counter had to give up and sell at the price set by the company. This is a case of what retail investors had repeatedly called for institutional fixes against, the so-called "private equity's retail shakeout."
According to the investment banking (IB) industry on the 19th, the E&F PE–IS Dongseo consortium recently signed a stock purchase agreement (SPA) to sell 100% of Koentec shares to Hong Kong-based PEF manager Gaw Capital. Gaw Capital is said to plan to complete the transaction as early as the first half of next year after conducting due diligence on Koentec.
The sale price is said to be in the mid-700 billion won range. Koentec's earnings before interest, taxes, depreciation and amortization (EBITDA) for last year is known to be about 40 billion won. That implies a multiple of 18 times EBITDA, and given the 48,580,720 shares outstanding, the per-share price is tallied to exceed 15,000 won.
Upon closing of the sale transaction, the E&F PE–IS Dongseo consortium is expected to post a capital recovery of at least more than 150 billion won. It comes about five years after acquiring a management control equity stake in Koentec from Macquarie PE in 2020, with roughly 600 billion won invested in the initial control stake purchase and additional equity acquisitions.
Koentec is considered the largest waste disposal company in the Yeongnam region. Its core business is handling designated and general industrial waste generated at manufacturing plants such as refining, petrochemicals, shipbuilding and automobiles in industrial complexes in Ulsan and South Gyeongsang, giving it stable cash generation. Last year's revenue was about 80.5 billion won, with operating profit of 30.5 billion won.
After the acquisition, E&F PE recouped a substantial portion of its principal through high dividends, and in the final stage proceeded with delisting. In particular, E&F PE adopted a strategy of valuing Koentec's corporate value at 450 billion won, acquiring minority shareholders' equity and delisting, thereby completing a structure that solely captured the control premium.
In Nov. last year, E&F PE valued Koentec's corporate value at around 450 billion won and proceeded with a tender offer at 9,000 won per share. Compared with the approximately 420 billion won it invested to secure a 59.29% management control equity stake in Koentec earlier, it effectively cut the company's overall value to nearly half of the acquisition-time level.
The tender offer results fell far short of E&F PE's expectations. Although it designated the entire remaining shares (18,937,913 shares) excluding Koentec shares held by the special purpose company (SPC) ENI Holdings and treasury shares as the tender offer target, it secured 10,118,030 shares (a 20.24% equity stake) through the tender offer, below plan.
Backlash from minority shareholders, who called it "an absurdly low price compared with the company's cash-generation capability and the value of its landfill asset," was the cause. Some shareholders are understood to have filed a "petition for determination of purchase price" with the court, saying that "the 9,000 won set by the controlling shareholder seriously damaged the company's intrinsic value."
E&F then shifted to open-market purchases. The aim was to maximize its equity stake through open-market purchases and then carry out a cash-for-share exchange to squeeze out minority shareholders. Under the current Commercial Act, if a controlling shareholder secures two-thirds or more of the equity, the controlling shareholder can forcibly purchase minority shareholders' shares through a special resolution at a shareholders meeting.
Shareholders who held out to the end with the remaining 6.46 million shares (12.9%) were squeezed out at 9,000 won per share. The forcibly taken equity is estimated to carry about 40 billion won in additional value based on a mid-700 billion won sale price. As a result, E&F PE, which exploited the lack of minority shareholders' defense rights, will absorb the disposal gains intact.
E&F PE's equity accumulation process was meticulous, but criticism is mounting that it cannot avoid blame. Considering there was no rapid shift in industry conditions in just half a year, it is hard to avoid suspicion that the value calculated by the controlling shareholder at the time of delisting was a "retail shakeout price" that thoroughly excluded the control premium.
Among minority shareholders, complaints persist that "the price of trusting and waiting for the company's growth was forced expulsion." While E&F PE made money, some also say that such behavior, which undermines fairness in the capital market, will inevitably act as a catalyst for the "Korea discount."
An official at a securities industry firm said, "It is true that under current law there are insufficient mechanisms to verify whether the purchase price of minority shareholders' shares is appropriate in a voluntary delisting process," adding, "Institutional safeguards are needed against cases where a controlling shareholder exploits delisting to monopolize profits before selling management control."