EQT kicks off South Korea infra focus with cybersecurity deal

SK Shieldus is EQT’s first South Korean infra deal, as the firm targets further investments in energy, transport and digital infra.

Sweden-headquartered EQT is focusing on South Korean infrastructure opportunities after snapping up integrated security operator SK Shieldus.

The acquisition of SK Shieldus, announced earlier this month, marked the firm’s first infrastructure deal in the country and follows the recent opening of the manager’s Seoul office. As part of the deal, EQT bought Macquarie Asset Management’s 37 percent stake in the business and purchased a portion of remaining stakeholder SK Square’s shares. The firm also subscribed to a new primary issuance of shares.

Bringing the equity value of SK Shieldus to €3.7 billion, the transaction will leave EQT with a 68 percent stake in the business. SK Square, which is part of South Korea’s second largest conglomerate SK Group, will hold the remaining 32 percent stake.

Speaking with Infrastructure Investor, EQT’s APAC head of infrastructure, Ken Wong, said the firm’s decision to put additional equity into the business – which provides digital security infrastructure across 680,000 commercial customer sites and more than 100 central monitoring and dispatch centres around the country – was part of the strategic roadmap it had outlined with SK Group as to where EQT would invest.

“That’s a key part of what SK Group was looking for in the right partner. This deal isn’t about cost out. It isn’t just about optimisation of the operations – of course, that’s something that every good private capital investor does – it’s about where we see growth in SK Shieldus’ physical security business, where we see growth in its cybersecurity business, and we have already pre-funded some of that growth with the subscription of new shares because the equity required [to ensure that growth] needed money upfront,” Wong said.

“That shows a different type of investment mindset as opposed to other firms which would say ‘let’s try to minimise the equity cheque upfront’. We’re looking at the opportunities that are ahead of us and going after those with full force and vigour, and we’ve subscribed to new shares to help fund some of those acquisitions as well as capex projects.”

South Korea’s infrastructure landscape is expected to be a focal point for the firm following its expansion into the Asia-Pacific region in recent years. According to the head of EQT’s South Korea infrastructure team, Sang Jun Suh, the country offers opportunities that tie in well with the firm’s investment themes and areas of expertise, including energy and environment, transport and logistics and digital infrastructure.

“South Korea is the largest maker of semiconductor chips and it produces roughly 40 percent of global EV batteries. All these tech-heavy industries require a lot of energy and they produce a lot of waste. You need environmental solutions to process this industrial waste properly, so energy and environment will definitely be a key theme for EQT in South Korea,” Suh said.

“Having a highly specialised and advanced local e-commerce and retail economy means the country’s going to have a lot of opportunities in the transport and logistics sector as well, so this will also be a big focus for us in South Korea.”

SK Shieldus was acquired via EQT Infrastructure VI which, as a result of the acquisition, is expected to be between 5 and 10 percent invested based on its €20 billion target fund size. Launched in September, the fund has raised €2.8 billion as at 31 December 2022, according to EQT’s 2022 year-end report. It has a €21 billion hard-cap.

EQT declined to comment on fundraising.