SK may sell assets in Vietnam, Malaysia to raise billions of dollars

South Korean conglomerate SK Group is considering selling some of its assets in Vietnam and Malaysia owned by its investment vehicle SK South East Asia Investment Pte. Ltd. to gird for worsening economic conditions, people familiar with the matter said on Sunday.

The possible asset sales come at a time when Korea’s big companies are hoarding cash while refraining from aggressive investments in new projects amid a gloomy business outlook for next year.

SK South East Asia Investment holds a 6.1% stake in Vietnam’s largest conglomerate Vingroup JSC, a 9.5% stake in Vietnam’s No. 2 conglomerate Masan Group, a 14.5% stake in retail chain Pharmacity, a 54% stake in drug company Imexpharm Corp., a 16.3% stake in retailer VinCommerce, a 4.9% stake in The CrownX Corp., and an unidentified stake in BigPay, a fintech unit of Malaysia’s AirAsia Group Bhd.

An SK official said no concrete decisions have yet been made. Details such as the companies and the size of the stakes up for grabs will be determined later, he added.

 

PREEMPTIVE MOVE

“SK is not in a financial crunch. It just wants to preemptively secure funds to prepare for worsening economic conditions,” said an investment banking industry source.

Since launching in 2018, Singapore-based SK South East Asia Investment has spearheaded the group’s investment activities in diverse business sectors across Southeast Asia.

Five SK Group affiliates – SK Inc., SK E&S Co., SK Hynix Inc., SK Telecom Co. and SK Innovation Co. – have each chipped in $200 million in the investment vehicle for a total paid-in capital of $1 billion.

SK South East Asia Investment, in partnership with Korea’s state pension fund National Pension Service, has spent as much as 3 trillion won ($2.34 billion) to purchase stakes in the seven Vietnamese and Malaysian companies.

SURVIVAL THE TOP PRIORITY

Last month, SK Group Chairman Chey Tae-won said at a company meeting that survival now takes top priority over profits and management efficiency, urging heads of group affiliates to hoard cash in preparation for an emergency.

The outstanding net borrowing at SK Inc., the holding company of SK Group, ballooned to 10.87 trillion won on a consolidated basis at the end of the third quarter, from 6.88 trillion won at the end of 2018.

As part of groupwide efforts to secure funds, SK On Co., a battery maker, in mid-December raised 1.32 trillion won by issuing redeemable preferred shares (RPS) to Korea Investment Private Equity and other private equity firms.

SK E&S raised 1.38 trillion won through the issuance of 735 billion won in redeemable convertible preferred shares (RCPS) in Busan City Gas Co. and the sale of its headquarters for 633 billion won.

SK Group is said to have secured as much as 4 trillion won in emergency funds so far this year.

But the group is known to be investing heavily in future growth drivers such as semiconductors, AI and raw materials.

Some of the proceeds from the sale of stakes in the Vietnamese and Malaysian companies could be reinvested in promising companies in Southeast Asia, sources said.

(Updated to add comments from an SK official and clarifications on possible sales of stakes up for grabs.)

Write to Ji-eun Ha and Jun-Ho Cha at hazzys@hankyung.com
In-Soo Nam edited this article.