[Edaily Marketin KIM SUNG-SOO Reporter] “Large corporations are selling, and private equity (PE) firms are buying.”

The rapid growth of the artificial intelligence (AI) industry is reshaping capital flows in the domestic infrastructure investment market. As major Korean conglomerates focus their resources on core businesses such as semiconductors and AI and sell off their energy and infrastructure assets, domestic and international private equity (PE) firms are viewing this as a new investment opportunity and are rushing into the market one after another.

There is a growing trend toward a virtuous cycle: when PE firms acquire infrastructure and transform it into a platform, the growth of the AI industry creates new demand. Furthermore, analysts note that the domestic infrastructure market has entered a new growth phase, driven by increased power demand resulting from the expansion of AI data centers, coupled with large-scale government policy funding.

Conglomerates Sell, PE Firms Buy… Energy and Infrastructure “Change of Hands”

According to the financial investment industry on the 1st, there has been an increase in cases where domestic and international private equity firms are acquiring domestic infrastructure assets.

Global private equity firm Kohlberg Kravis Roberts (KKR) and the IMM Investment-StoneBridge Capital consortium are acquiring 29% and 20% stakes, respectively, in “SK Horizon,” a company specializing in AI data center infrastructure. Management control will remain with SK Telecom, which will hold a 51% stake in SK Horizon.

SK Telecom has carried out a spin-off of its wholly-owned subsidiary, SK Broadband, into △the surviving entity, SK Broadband, and △the newly established company, SK Horizon. SK Horizon is a newly established entity specializing in AI data center operations, created through the spin-off of SK Broadband to enable SK Telecom to focus on its artificial intelligence (AI) infrastructure and data center (DC) businesses.

SK Telecom has decided to sell a portion of its shares to a consortium consisting of KKR and IMM in an over-the-counter transaction to secure investment funds for its growth businesses. The total value of the share sale and new share subscription transactions is 3.08 trillion won.

SK Telecom’s proceeds from the stock sale amount to 1.8811 trillion won, and the scheduled date of the sale is March 4 of next year. The company plans to proceed with relevant procedures, such as obtaining government approvals and holding an extraordinary general meeting of shareholders, with the goal of completing the final spin-off and launching the new entity in the first quarter of next year.

Additionally, KKR finalized a transaction on the 11th to acquire a 43.10% stake in SK E-Tronics from SK Discovery and Han & Company. While the total amount at the time of the contract was 347.9 billion won, the final purchase price increased to around 350 billion won following an adjustment to the price per share.

SK E-Tronics is a renewable energy power generation company that develops and operates solar, wind, energy storage systems (ESS), and fuel cells in South Korea. It was spun off from SK D&D in March 2024; SK D&D now handles the real estate business, while SK E-Tronics manages the eco-friendly energy generation business.

Korea Investment Private Equity (KITPE) and the STIC Alternative consortium successfully closed a deal in June to acquire a 49% stake in Ulsan GPS and SK Multi Utility (SKMU). The transaction was valued at approximately 1.6 trillion won.

Ulsan GPS is the world’s first gigawatt (GW)-class combined-cycle power plant capable of burning both liquefied natural gas (LNG) and liquefied petroleum gas (LPG). In 2018, it became the first private power generator to switch its fuel source from coal to natural gas (LNG and LPG).

In addition, SKMU is a district energy provider that supplies utilities to industrial complexes through combined heat and power (CHP) generation, which produces both electricity and heat simultaneously. By switching from coal to LNG within industrial complexes, it is leading the transition to low-carbon energy.

In addition, the IS Dongseo–E&F Private Equity (PE) consortium signed an agreement last December to sell controlling interest in the waste incineration company KoenTech to the Hong Kong-based private equity fund manager Go Capital. Geo Capital, Apulma Capital, and IMM Private Equity (PE) participated in the main bidding process held last September.

KoenTech is the largest industrial waste incineration company based in the Ulsan region. Its core clients include large petrochemical plants, automakers, and shipyards in the Ulsan area, and the company incinerates and landfills the waste they generate. IS Dongseo and E&F PE jointly acquired the company in 2020.

Business

Restructuring by

Major Conglomerates… Opportunities for PE to Acquire Infrastructure Assets

The shift of private equity capital toward

the infrastructure market

is driven by “business restructuring among

major

domestic conglomerates.”

This is because conglomerates are actively engaging in “capital recycling”—the sale of their existing energy and infrastructure assets—as they focus their investments on high-growth core businesses such as semiconductors and AI.

In the finance and investment sectors, “capital recycling” refers to a strategy in which funds secured through the sale (or divestment) of existing assets or companies are not returned to investors but are reinvested in new, high-return investment opportunities.

From the perspective of private equity firms, these moves by large corporations have opened up opportunities to acquire infrastructure assets—which generate stable cash flows—on a relatively large scale.

The scope of PE firms’ infrastructure investments is also gradually expanding

While investments were previously limited to traditional infrastructure assets such as roads and ports, they have recently broadened to include LNG power generation and terminals, renewable energy, and data centers.

Private equity firms are taking this a step further. They are employing a “bolt-on” strategy, which involves acquiring scattered energy and infrastructure assets one by one and then integrating them into a single platform.

For example, this involves sequentially acquiring renewable energy businesses or liquefied natural gas (LNG)-related assets to achieve economies of scale. It is a strategy that secures stable cash flows from individual assets while simultaneously bundling multiple assets to enhance the value of the platform.

Investment structures are also becoming increasingly sophisticated. Rather than limiting themselves to simple equity acquisitions, they are utilizing structures that combine convertible preferred stock (CPS), loans, and equity to reduce downside risk while increasing adjusted returns.

Convertible preferred stock (CPS) refers to shares that grant investors priority in dividends and the distribution of residual assets, while also granting the right to convert them into common stock whenever the investor wishes. Investors receive dividends before common stockholders, and as the company grows, they can convert the shares into common stock to profit from rising stock prices.

When a company’s business outlook is unfavorable, investors maintain stable dividends by holding the shares as preferred stock; when the outlook is favorable, they convert them to common stock to pursue additional returns.
As

AI Consumes Power… PE’s Next Investment Target Is ‘Power Plants’

Another reason PE firms are focusing on the energy and infrastructure markets is AI. As AI data centers proliferate rapidly, the value of infrastructure capable of providing a stable supply of massive amounts of electricity is increasing.

Samsung Securities initially estimated the annual growth rate of the domestic private data center market at 23% through 2030, but significantly revised this upward to 51% after factoring in the “Three Major Mega Projects” announced last June.

Previously, the government announced the “Three Major Mega Projects for Korea’s Great Leap Forward”—centered on semiconductors, physical AI, and AI data centers—in a Korea Policy Briefing. Furthermore, data center capacity is projected to expand to 18 GW by 2030, which is nine times the current level.

The issue is power supply. As the Seoul metropolitan area’s power grid reaches capacity, a development model combining power plants and data centers is gaining traction in regional areas. The Ulsan AI data center jointly developed by SK Telecom and Amazon Web Services (AWS) is a prime example.

SK Telecom and Amazon Web Services (AWS) are investing approximately 7 trillion won in the Ulsan Mipo National Industrial Complex to build the country’s largest hyperscale data center dedicated to AI. The goal is to begin operations next year with a capacity of 40 MW and complete the facility with a total capacity of 100 MW by 2029.

“Behind-the-Meter” (BTM) and “onsite” models—where data centers either own power plants directly or utilize nearby power generation assets—are also gaining attention. “Behind-the-Meter” (BTM) refers to self-generation units, energy storage systems (ESS), solar panels, and other equipment installed on the consumer side—such as homes, buildings, factories, and data centers—that consume electricity.

This is a method where consumers directly generate or manage electricity and feed it into the grid before the meter.

“On-site power generation” refers to a method of producing and consuming electricity by constructing small-scale power generation facilities directly adjacent to or on the premises of locations where electricity is needed (such as data centers and factories).

This implies that as the number of AI data centers increases, the entire power supply chain—including power plants, LNG terminals, and renewable energy—could expand as investment targets.

The value of LNG power generation assets is also rising. LNG terminals operate on the basis of long-term fixed contracts, such as Terminal Use Agreements (TUAs), while LNG power generation exhibits the inherent characteristics of infrastructure assets due to high revenue visibility as part of industrial complexes’ power supply networks. This is why private equity (PE) firms have increasingly been entering the market, primarily through equity transactions involving LNG assets.

To reduce the cost of LNG power generation, companies are also increasing the proportion of LNG they source directly. The EV/EBITDA transaction multiple for LNG power generation assets, which used to be around 5 to 6 times, has risen to 10 to 12 times following the spread of direct sourcing by companies.

EV/EBITDA is a corporate valuation metric calculated by dividing a company’s total enterprise value (EV) by its cash-generating capacity from operating activities (EBITDA).

“Infrastructure Investment, Growth Phase”… Focus on ‘Platforms’ Rather Than Assets

Renewable energy is also becoming an increasingly attractive investment. Starting in 2027, the Renewable Energy Supply Obligation (RPS) system will be abolished and consolidated into a government-led 15-year long-term fixed-price contract market, which is expected to improve revenue stability.

The Renewable Portfolio Standard (RPS) is a system that requires large power generators with a capacity of 500 MW or more to supply a certain percentage of their total power generation using renewable energy.

As such, with the abolition of the RPS and the transition to a market based on 15-year long-term fixed-price contracts, renewable energy has begun to take on characteristics similar to infrastructure. Offshore wind power is becoming the largest project financing (PF) market.

Investment conditions in the infrastructure market are also changing, as policy funds are joining private equity (PE) capital.

The government has declared 2026 the first year of “productive finance” and launched the National Growth Fund, worth 75 trillion won. A significant portion of these funds is expected to be allocated to physical infrastructure, such as power grids, power generation, and AI data centers.

The private investment project market is also expanding. The government has increased the target for identifying new private investment projects over the next five years from 70 trillion won to 100 trillion won. It plans to attract private capital by utilizing models such as the profit-sharing BTO-a approach, under which the government provides a certain level of protection against losses while sharing excess profits.

The profit-and-loss-sharing BTO-a model is a private investment approach in which the government and the private sector jointly cover the minimum operating costs required for facility construction and operation, and share profits and losses to reduce project risks.

Consequently, there is a growing consensus that the domestic infrastructure market is entering a period of structural growth. Institutional investors, in particular, have an incentive to increase their allocation to private infrastructure assets. This is because infrastructure assets offer stable cash flows and protection against inflation, while also being attractive in terms of risk-adjusted returns.

An official from the financial investment industry stated, “With the simultaneous inflow of large-scale policy funds and private equity (PE) capital, the investment scope of the domestic infrastructure market—which was previously limited to transportation infrastructure—is rapidly expanding,” adding, “The focus of the market is shifting from simply ‘which infrastructure assets to buy’ to ‘which infrastructure assets to bundle together to drive growth.’”