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KKR buys $2bn new shares in South Korean energy company SK E&S to capture transformation to clean energy

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Global buyout giant KKR has bought KRW 2.4tn ($2bn) of shares in South Korean energy company SK E&S.

SK E&S’s share price has fallen 30% from its high point of KRW 355,000 in January this year to close on KRW 247,500 a piece on Friday.

The firm said the shares are redeemable convertible preference shares which will provide the firm with an opportunity to receive cash or in-kind redemption as an option for repayment in the future, as well as the opportunity to convert into common shares.

Established in 1999, SK E&S is part of South Korean conglomerate SK Group. It provides upstream service from overseas gas field development down to downstream power generation, district energy and city gas distribution. It operates a city gas business which distributes natural gas across eight regions in South Korea.

The firm said the new funding will transform the company into a global clean energy provider.

Keith Kim from KKR’s Infrastructure team said, “KKR is excited by this unique opportunity to join SK E&S in its journey to accelerate its growth and transformation into a global clean energy solution provider. KKR is additionally pleased to further expand its valued relationship with the SK Group. Sustainability continues to be at the top of its minds at KKR when reviewing and executing investments, which is why KKR is excited to invest together with leading businesses such as SK E&S that seek to provide sustainable energy solutions.”

David Luboff, head of Asia Pacific Infrastructure at KKR, said, “Korea is a key part of KKR’s Asia infrastructure strategy. It is home to many companies with great potential for growth both domestically and abroad. We look to continue investing in compelling infrastructure opportunities where we can leverage KKR’s global experience and networks to partner with Korean businesses to achieve their transformations.”

KKR made its investment from its Asia Pacific Infrastructure Fund, which it closed on a $3.9bn hard cap final close in January.

The firm also  closed Asia Fund IV on $15bn in April, making it the biggest private equity fund dedicated to the Asia-Pacific region.

The firm said it committed $1.3bn of its own capital to KKR Asian Fund IV, which it said would pursue opportunities stemming from rising consumption and urbanisation trends, as well as corporate carve-outs, spin-offs, and consolidation as companies look to optimize their portfolios.

The firm collected a $9.3bn for Asia Fund III in 2017.

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