A pile of plastic waste (123rf)

South Korea’s battery materials maker and petrochemical firm LG Chem said on May 11 that it plans to commit 150 billion won ($134 million) to a new private equity fund that targets promising companies dedicated to electric vehicle parts and eco-friendly plastics.

The capital will be part of IMM Credit Solution’s upcoming growth-focused Korea Battery & ESG Fund, which aims to earmark a total of 400 billion won.

IMM Credit Solution is a subsidiary of Korea’s third-largest private equity firm, IMM Private Equity. The subsidiary has led a 1.1 trillion won proposed acquisition of SK Lubricants’ minority stake from parent SK Innovation.

LG Chem said it was seeking fresh exposure to fledgling companies through the growth capital fund, in an unprecedented move to back an external manager’s fund as its anchor limited partner.

The fund’s target companies will be primarily in the field of manufacturing lithium-ion battery anodes and cathodes, recycling metal for batteries, recycling waste plastics or making biodegradable plastics, which bodes well for its move to take into account environmental, social and governance factors in management.

“The deal will strengthen an ESG ecosystem of LG Chem and promising small and midsized enterprises and lay the groundwork for (LG Chem) to discover a future growth engine,” LG Chem Vice Chairman Shin Hak-cheol said in a statement.

Also, it is IMM PE’s first green move since it pledged earlier in May to take into account ESG factors in making fresh investments and managing its portfolio firms.

IMM PE, which has worked with Korean allocators including the National Pension Service, said last week that it plans to undertake an ESG review of new investments with Samil PricewaterhouseCoopers and Deloitte Anjin and urge its portfolio firms to comply with ESG disclosure guidelines.

IMM PE also said it supported initiatives for sustainable investing, such as the United Nations Principles for Responsible Investment and the Task Force on Climate-Related Financial Disclosure.

By Son Ji-hyoung (consnow@heraldcorp.com)