Environmental services and waste management – expert interview with Howard Lee

BDA Partners advised IMM’s consortium on their successful US$1.6 billion acquisition of Ecorbit from KKR and Taeyoung Group which closed in December 2024.

Ruari Sinclair and Mark Webster from BDA Partners’ Sustainability team sat down with Howard Lee, BDA’s Head of Seoul, to discuss Korea’s largest M&A transaction of 2024, IMM’s acquisition of Ecorbit, the waste management leader.

MW: Ecorbit was both Korea’s largest M&A deal of 2024 and its largest waste management company (by revenue & EBITDA); talk us through the transaction and BDA’s role?

HL: The acquisition of Ecorbit by the IMM consortium is a milestone in Korea’s waste management sector, highlighting the growing strategic significance of environmental services and its evolving dynamics. As the #1 national player, Ecorbit presented unique opportunities – and challenges – that required a meticulous approach to maximize value.

BDA took a critical role in structuring and executing this complex transaction, identifying growth drivers and proactively addressing material transaction risks. We also developed a robust financial model that analysed various growth scenarios across Ecorbit’s multiple business units. For example, the landfill business unit faced continuity risks as capacity decreased, requiring careful analysis and strategic planning. Our input enabled IMM to build confidence in Ecorbit’s ability to deliver scalable, sustainable growth.

BDA’s support extended throughout due diligence and negotiation, ensuring the smoothest possible path. The acquisition not only solidified Ecorbit’s growth trajectory under IMM’s ownership but also set a new M&A benchmark in Korean waste and environmental services. From an in-house perspective, it was good to build on our established track record in the sector, including our role in SK ecoplant’s acquisition of EMC in 2020, which was also Korea’s largest waste management platform transaction at the time.

RS: What is the market opportunity for the Korean waste management sector today, and how has it evolved over the past five to ten years?

HL: Since 1960, Korea’s economy has grown significantly (GDP US$3.96bn 1960 to US$1.71t 2023), driving the expansion of the waste management industry alongside urbanisation and industrialisation. While total waste discharge rose steadily until 2021, COVID-19 caused a temporary decline in 2020-2022. From 2023, volumes have resumed their growth.

Substantial market potential still lies ahead, given ever-stricter environmental rules, increasing demand for advanced processing technologies, and a growing emphasis on sustainability. Over the past decade, we have seen the industry shift from a fragmented landscape to a more consolidated market dominated by large-scale operators. This transformation has been propelled by regulatory pressures, via measures such as the Waste Control Act and Circular Economy Legislation, rising operational costs, and heightened investment in infrastructure and innovation.

Consumer awareness and corporate ESG initiatives have further reshaped the sector, driving demand for sustainable waste solutions such as recycling and waste-to-energy technologies. Leading companies like Ecorbit have capitalized on these market trends by offering integrated waste management services to customers, addressing diverse needs from municipal to industrial waste. This convergence of regulatory, consumer, and corporate priorities has positioned Korea’s waste management sector as a vital contributor to the country.

Total Korean waste discharge volume, unit: ton in millions

Source: Korean Ministry of Environment

MW: What are the key characteristics of the Korean waste management sector, compared to other countries?

HL: Countries exhibit notable differences in waste management practices due to regional and historical factors. The United States relies on landfills, Japan uses incineration, Germany leads in recycling due to limited natural resources, and France has adopted balanced approaches integrating multiple methods.

Korea’s reported recycling rate appears high (~90%), but this includes energy recovery from incineration; many other countries exclude this. The “actual” material recycling rate is closer to ~20%, with landfill and incineration accounting for ~80% of waste management.

Historically fragmented, Korea’s waste management sector has transformed since the 2010s with private equity and corporate involvement. Ecorbit itself has optimized waste treatment and spearheaded operational efficiency, technological advancement, and sustainable practices. The sector’s competitive dynamics require major players to keep developing to secure future success.

Method of waste management by country, unit: %

Source: OECD

RS: How do you see the future of the Korean waste management market?

HL: The Korean waste management market is poised for significant growth, driven by government initiatives promoting a circular and environmentally friendly economy. These efforts focused on waste reduction, recycling, and material reuse, create a favorable environment for the sector. As sustainability becomes central, even more consolidation among key players is expected, with larger firms expanding portfolios and geographic reach to capture market share, further optimizing operations.

Technological advancements in landfill, recycling, resource recovery, and waste-to-energy solutions create new opportunities for market entrants. These innovations provide operational efficiencies and enable new business models, addressing the growing demand for sustainable practices. Companies adopting advanced technologies will be well-positioned to meet evolving consumer and regulatory needs.

Decarbonization efforts, alongside stricter regulations, are also reshaping the market, prompting operators to adopt more sustainable practices and optimize processes to comply with environmental standards. This professionalization of the sector emphasizes sustainability, compliance, and long-term value creation.

Korea’s increasingly sophisticated waste management market is attracting interest from cross-border investors. The country’s commitment to sustainability and its proactive environmental stance make it an appealing destination for global capital, with foreign investments playing a key role in accelerating sector development and innovation.

MW: Why are financial sponsors attracted to the Korea waste management sector?

HL: Financial sponsors like the Korean waste management sector due to its resilience, scalability, and alignment with long-term sustainability / circular economy trends. It offers stable, recurring revenue streams, supported by government regulations and the essential nature of its services. Additionally, technological advancements and operational efficiencies present good growth potential, driving profitability and market share expansion.

Furthermore, there are unique opportunities for financial sponsors to create large-scale, vertically integrated platforms. As smaller players merge or are acquired by larger firms, a more concentrated and professionalized market is evolving, where economies of scale, broader service offerings, and geographic expansion all drive value creation. So, by investing in waste management, sponsors can leverage both the sector’s growth potential and its ability to generate stable returns, making it an ideal target for long-term, value-driven investments.

RS: We have seen several waste management transactions in Korea over the last few years – do you see a strong pipeline of more assets coming to market?

HL: 2024 was a standout year for Korean waste and environmental services M&A. Ecorbit aside, KJ Environment was acquired by EQT from Genesis Private Equity for US$700m+, Affirma secured J Entec for US$392m and Glenwood bought three waste management businesses from Bubang. These and earlier private equity investments will need a future exit and this will drive a good level of M&A activity for the sector in the coming years.

Growing private equity investor interest has also encouraged companies to streamline operations and divest non-core assets. Meanwhile, the success of landmark deals like Ecorbit has boosted market confidence, paving the way for similar large-scale transactions. We therefore anticipate increased activity in niche segments such as landfill, hazardous (chemical) waste management, industrial recycling, and waste-to-energy facilities.

BDA’s regional perspective:

We continue to see increased M&A activity and interest across Asia in the waste and environmental services sector. Asia generates about 60% of global municipal waste with c. 1.3 billion tons generated annually, expected to grow to >2.4 billion tons by 2050. This expansion is largely driven by:

Expanding populations and continued urbanisation – especially in South and Southeast Asia
Relatively robust economic growth, boosting income levels – leading to higher consumption and generating more waste per capita
Greater industrial manufacturing activity and e-waste generation with increasing technology use
Lack of integrated and sufficient waste management and recycling systems resulting in lower waste collection rates especially in low to middle-income regions
- The average municipal solid waste collection in East and Southeast Asia rate is 75% compared to >98% in Europe and North America
Stricter regulatory regimes driving opportunities in waste recycling technologies and processes – and transactions

If you would like to speak to our Seoul or Sustainability sector teams to learn more about how we can help you achieve your M&A objectives – in waste management or beyond – please contact any of the team members below.

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with 30 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets. bdapartners.com

Jeff Acton, Co-Head of Tokyo, BDA Partners, was quoted by Bloomberg.

He predicts a yet busier 2025, after Japan’s US$230bn M&A boom last year.

“We’re seeing a significantly increased universe of investors and buyers,” said Jeff Acton. “Lately, I’m having two to three meetings a week with new investors and funds looking to enter the market. Five years ago, it would’ve been zero meetings.”

Read the full article here

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

BDA Managing Partner Euan Rellie spoke with MergerMarket about the year ahead:

“Positioning the current market situation as the natural fallout from a benign five-year period, Euan Rellie, a managing partner at BDA Partners, which advises many GPs on exits, describes the last 18 months as “the most difficult I’ve seen in my 30-plus year career.”

“Assessing the prospects for private equity exits of all kinds, BDA’s Rellie expects India and Japan to remain in demand, consistent but below-the-radar activity in Korea, and a gradual revival in more emerging markets like Vietnam where the impact of the global M&A slowdown was most severe.

“He is also optimistic about China, observing that with valuations now so low, opportunistic investors – including some strategic players – will look to do more. For example, while a mid-size branded food asset in India currently trades for 6x revenue, similar businesses in China are available for 6x EBITDA. This often means the sale price in China is one-fifth that of India.

“In Asia more broadly, BDA has found that private equity investors paid up for assets that in many cases have fallen short of growth projections over the past five years. Facilitating exits became harder when interest rates went up because differing perceptions of the macro environment among buyers and sellers led to price dislocation. More recently, however, Rellie has seen a shift in mood.

“We’ve had a lower close rate than usual in the first three quarters of 2024, but we are seeing a rash of deals coming through,” he said. “With interest rates coming down, everyone wants to get things done. A lot of private equity firms haven’t done much in the past 18 months and they can’t hold forever.”

About BDA Partners

Simon Kavanagh, Head of Industrials, BDA, was quoted in Bloomberg.

Bloomberg reports that 2024 has been a busy year for takeovers involving Hong Kong-listed companies, with US$38bn in M&A activity, the highest since 2017, including several contested deals.

“Regardless of the winner, if these transactions progress smoothly and the Hong Kong Takeover Code is seen to work well, we can expect to see further opportunistic approaches to public shareholders,” said Simon Kavanagh.

“The trend would be a welcome catalyst for the local stock market,” added Kavanagh.

Kavanagh notes that despite recent gains in Hong Kong stocks, “the Hang Seng Index is still trading at half the price earnings ratio of the S&P 500 Index, so there is value to be found on the Hong Kong market.”

Read the full article here

About BDA Partners

Paul DiGiacomo, Managing Partner and Head of Financial Sponsors Group, BDA, was interviewed in Seoul Economic Daily.

“The M&A market is expected to recover in earnest starting next year. With interest rates falling, and the uncertainty around the US presidential election resolved, M&A transactions are likely to increase through 2026-2027.”

“Most Asian markets, except for India, were sluggish through the first half of 2024. However, they’re recovering, with 75% of annual transactions concentrated in the second half,” DiGiacomo noted.

He outlined three key reasons for the market recovery:

The increase in private equity funds’ dry powder
The downward trend in interest rates
The resolution of policy uncertainty following US elections

He predicted, “It will take 2-3 years just to deploy the dry powder accumulated by PEFs, who could not execute during the COVID pandemic due to high interest rates.”

He also expects an increase in the sale of overseas assets and carve-outs by large corporations in the Korean market. Notably, the recent sale of Doosan Energy’s Indian subsidiary, Doosan Power Systems India (DPSI), to local real estate company Casagrand Builder.

“The first target of restructuring for large corporations will be overseas assets; this is a necessary step to enhance competitiveness in their core businesses.”

“PEs are particularly attracted to assets that guarantee stable sales through long-term contracts with parent companies, or assets that can reduce unnecessary labor costs and brand usage fees resulting from consolidation by large companies. There are instances where PEFs acquire businesses that have shrunk due to poor industry conditions and can rapidly increase corporate value through external growth or margin improvements with minimal restructuring.” He cited the waste management industry as a prime example of PEF-led consolidation. He noted that high-risk industries, such as new drug development and industries facing significant policy uncertainty, like rechargeable batteries, are less attractive to private equity.

DiGiacomo described the recent increase in transactions between PEFs as a “natural phenomenon.” He explained that “Strategics are focusing on holding cash and maintaining asset liquidity due to the slump in major industries such as semiconductors and rechargeable batteries, as well as ongoing policy uncertainty. As the industry enters a boom period, transactions between strategic investors and PEs will increase, leading to a symbiotic relationship.” He further noted, “This P2P format will involve overseas private equity selling to local funds or local funds selling to overseas PEs, resulting in transactions where LPs do not overlap.”

“Most GPs want to attract overseas LPs but don’t know how to go about it. A good strategy would be to create touchpoints with overseas LPs through secondary deals or continuation funds.”

He identified promising areas for future investment, including software, environmental industries, K-food, and K-beauty.

“Five years ago, strategics were the main investors in the software sector, but now PEs are actively engaging. For example, Skylake Equity Partners, which has a strong understanding of IT, is increasing its investment in software. As the semiconductor industry recovers, advanced materials companies will attract attention.” Industries related to the circular economy, such as water treatment and climate change solutions, also look promising.

About BDA Partners

President Donald Trump will be inaugurated for a second time on 20th January 2025. His trade policies, if enforced, will upend the post-WWII global trading system. Global multinationals and exporters worldwide will face a significantly more difficult business environment.

This may understate the coming change. Trump’s new administration will challenge the global consensus and the accepted wisdoms of modern economics.

In the short term, companies and investors must prepare for tariffs, strained alliances, and impulsive, unilateral policymaking that will be aggressive even compared to Trump’s previous term. Relocating to Vietnam, India, or Mexico to cut costs and sidestep the US-China geopolitical rivalry will no longer shield global companies from uncertainty or further costs.

Significant tariffs on imports from outside the US may make Trump’s first-term trade wars seem trivial. According to his (consistently inconsistent) campaign statements, he may impose 60%-100% tariffs on goods from China and 10%-20% on everything else, no matter where these goods are made.

President Trump has promised to be a bomb-thrower, using aggressive tactics to benefit “America first”. We should take him at his word.
His incoming administration will face fewer checks and balances than his first. No trading partner will be entirely spared.
Opportunities will certainly emerge across Asia for countries who move fast and ingratiate themselves to the US markets.
All Asian countries will hope to find growth nearer to home and Intra-Asian trade will boom. Those Asian countries which show agility and diplomacy will enjoy great profits, in the coming turbulent seas.
On balance, India, Japan, and Indonesia look well-placed, but it would be foolish for any Asian companies to be complacent. As ever, fortune will favour those who are most courageous, and canny.
Technology and Healthcare are poised to thrive regionally. Consumer and Services companies will find room for growth.
Asian companies should not ignore the European markets, which will look increasingly attractive if the US puts up barriers.
BDA Partners stands ready to support its financial and strategic clients to take advantage of these fast-flowing waters. Change creates opportunities.

Download the full report here

About BDA Partners

BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 25 years’ experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services, Sustainability and Technology sectors. We work relentlessly to earn our clients’ trust by delivering insightful advice and outstanding outcomes.

US securities transactions are performed by BDA Partners’ affiliate, BDA Advisors Inc, a broker-dealer registered with the Securities and Exchange Commission (SEC). BDA Advisors Inc is a member of the Financial Industry Regulatory Authority (FINRA) and SIPC. In the UK, BDA Partners is authorized and regulated by the Financial Conduct Authority (FCA). In Hong Kong, BDA Partners (HK) Ltd is licensed and regulated by the Securities & Futures Commission (SFC) to conduct Type 1 and Type 4 regulated activities to professional investors. www.bdapartners.com

Huong Trinh, Partner and Head of HCMC, BDA, discussed Vietnam’s growing education sector in Vietnam Investment Review.

According to Trinh, market consolidation and platform expansion will draw attention from strategic investors, private equity and venture capital firms. Global and regional players are looking to acquire local education providers to strengthen their presence in Vietnam and expand platforms across the region.

“Simultaneously, local players with foreign backing are pursuing bolt-on opportunities to consolidate the market further. K-12 education remains one of the most active subsectors, while growing demand for private higher education is driving interest in Vietnamese universities,” Trinh said.

PE and VC firms will continue to play critical roles in driving the growth potential in Vietnam’s education sector, Trinh added.

“Financial sponsors typically focus on scaling operations to enhance efficiency and profitability, leading to increased investment in infrastructure, technology, and teacher quality. Moreover, with many education providers already backed by PE and VC firms, we anticipate more exits from financial sponsors in the coming years,” she explained.

Read the full article here

Jonathan Aiken, Partner and Head of London, discussed the global M&A market and the impact of macroeconomic and geopolitical conditions on UK-Japan business in a recent UK Japan Connect Newsletter.

As our report shows, 2023 was another challenging year for the global M&A market. APAC in particular saw decreased levels of activity. Japan, however, appears to have outperformed the rest of the region, especially for outbound transactions. This looks to be continuing through H1 2024. What is driving this activity?

We’re excited by what we are seeing in Japan: both inbound into Japan and outbound into the rest of the world. We’ve seen a rekindling of animal spirits driven by a host of factors:

Inbound

The continued rise of private equity, both local Japanese sponsors but also international financial investors. The recent approach by Alimentation Couche-Tard for Seven & I is the latest manifestation of increasing fluidity and movement of investment options into Japan. BDA hosts a range of private equity conferences events in Asia, including in Japan, and the nature and depth of participation has expanded significantly in the past few years.
Low cost of acquisition capital (compared to Western markets with constrained lending), buoyant equity markets, and the view of Japan as a safe strategic partner have combined to supercharge deal activity.
Japanese companies and assets, when they become available, typically hold premium market share positions or technology leadership; they are also offer highly sought after domestic customer market access.
With a clouded view of the Chinese market, Japan has become the preferred developed economy of choice for international investors in Asia.

Outbound

Weak domestic aggregate demand has traditionally pushed Japanese companies to invest overseas. This is coupled with significant megatrends including an ageing society; increasing footprint of large Japanese groups with significant exposure to developed economies such as the USA and Europe; continuing need for raw material, and production access to Southeast Asia and China.

Geopolitical stressors, including the war in Ukraine and the Israel-Gaza conflict have had a heavy impact on the global M&A market. Supply chain interruption, workforce displacement, inflation and interest rate rises have challenged boardroom confidence and resulted in a lack of available finance. How are you seeing this impacting Japan inbound and outbound M&A?

There is no doubt that getting deals is much harder than a few years ago. To take a few examples, post COVID we saw a deep acceleration in technology valuations followed by a spike in luxury and consumer investment related to home living. The COVID and energy shocks gave rise to increased inflation, squeezed margins and missed budgets. Forecasting became challenging, and buyer-seller valuation expectations diverged.

What we see now is a return to more normal, prosaic forecasting. But normal is good and this paves the way to increased deal flow. The relative political and economic stability in Japan has also contrasted well with a gyrating political landscape in Europe and North America which impacted confidence. Predictable economic policy and support has set the foundation, in many ways, for the favourable outcomes we see today in Japan.

A decade of loose monetary policy, including quantitative and qualitative easing and negative interest rates, has led to a steady depreciation in the value of the yen. Recent rate hikes by other central banks has only exacerbated the problem, notwithstanding a recent rate rise from the Bank of Japan and indications that more are likely to follow. How is the value of the yen impacting the Japanese economy and Japan M&A?

For private equity, low acquisition financing cost of capital is attractive. Japanese companies are seldomly overleveraged and there is certainly a capital efficiency arbitrage opportunity. The relative magnitude of rate rises in Japan compared to the West is modest and we do not expect any short term negative effects.

One theme in our report is heightened regulatory scrutiny of transactions. As antitrust and foreign investment (national security) regulators have become more aggressive, we are increasingly seeing transactions subject to detailed review, remedies and in some cases being prohibited entirely. In terms of national security reviews, in our experience, Japanese buyers have historically been viewed by regulators as “safe” owners of sensitive assets and infrastructure. Are you seeing any change in perception here?

In the West we see increasing scrutiny of mega mergers. Regulators, to take one example, largely regret earlier technology mergers that were allowed to go ahead when understanding was poor of the possible implications. This has led to more aggressive review and challenges of blockbuster deals in the West. Added to this are increasing tensions and blocking of transactions on national security grounds, such as MAN Energy’s blocked sale to a Chinese buyer. The recent historical experience in Japan is different, with fewer regrets and less national security concerns.

As a final question for our readership that may be looking at doing a Japan-outbound transaction in the next 12-24 months, what advice do you have for a Japanese company looking to acquire a foreign target? How can a Japanese company maximise its chances of success?

As a general rule, we find corporate groups have limited M&A teams and constrained post integration capabilities. Added to this is the relative cultural, language and sector challenges of seeing through a successful deal. An experienced advisor that can bridge these differences is therefore essential.

BDA specializes in deploying teams across the world: one team in close proximity to the shareholder with another team adjacent to the target. By working seamlessly together and leveraging key sector insights, local knowledge and best practices we enhance and maximize the prospects of success and minimize the all too common pitfalls that befall even the most experienced corporate deal team.

About BDA Partners

Mark Webster, Head of Singapore, BDA Partners, was quoted in Private Equity International:

It’s “unrealistic” to expect to find the same number of $1bn-plus deals in SE Asia as you find in the Western markets. One of the reasons for this is the fragmentation and scale of the region. There are not enough regional platforms that can navigate the nuances of SE Asia and address the demand for scale. “If your pan-SE Asia business is a properly integrated entity enjoying economies of scale, then that’s the dream. But not all can live up to that standard. They can try and project that image, but if you look under the hood, investors could discover there’s still work to do in terms of truly integrating a business that’s been built up by acquisitions across different geographies.”

Read the full article here

Korea’s M&A market showed encouraging signs of recovery during 3Q24, with optimism surrounding potential interest rate cuts and restructuring efforts from large conglomerates driving increased deal activity. PE funds aggressively pursued M&A opportunities, which led to a notable rise in high-value transactions. Five deals exceeded KRW1 trillion (US$750m) in 3Q24, compared to just one in 1H24.

Among the highest profile transactions during this period was the KRW2 trillion (US$1.5b) acquisition of Ecorbit, underscoring Korea’s active deal environment. BDA Partners played a key role in the transaction, advising the buyer, IMM Consortium, working across the table from UBS and Citi. This involvement has led BDA Partners to secure its place near the top of the M&A league tables for corporate acquisitions with a total transaction value of KRW 2.07 trillion in 3Q24.

This surge in large-scale deals reflects growing confidence in the market, as both local and international players capitalise on the improving financial advisory landscape. With interest rates expected to decline, even more M&A opportunities are likely to emerge, particularly in sectors such as waste management and semiconductors. BDA Partners, with its extensive experience, is well-positioned to navigate high-value transactions, as the market outlook remains positive.

Read the original article here