Korean battery sector to heat up IPO market again

South Korea’s battery industry is expected to heat up the initial public offering market later this year as battery materials and equipment makers are lined up for listings. They hoped jackpots similar to the ones of LG Energy Solution Ltd. and SK IE Technology Co. (SKIET) in 2021 despite growing concerns over rising interest rates worldwide.

Three South Korean companies in the battery sector are seeking IPOs in the first half, according to investment banking industry sources on Tuesday.

WCP EXPECTED TO BE VALUED AT $2.5 BILLION

Among them, W-Scope Chungju Plant Co. (WCP) is the most valuable company with an expected corporate value of 3 trillion won ($2.5 billion) when it is listed. WCP, a wholly-owned subsidiary of Japan’s W-Scope Corp., develops and produces separators, key materials of electric vehicle batteries along with anode materials, cathode materials and electrolytes. Costs of separators account for about 20% of the total production costs of a secondary battery.

WCP, the No. 2 separator maker after SKIET in the country, has its own polymer film technology, supplying products to Samsung SDI Co. and others.

WCP was known to have generated about 80 billion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) on sales of 200 billion won last year. It reported sales of 111.9 billion won in 2020.

The company has recently filed a preliminary review to the Korea Exchange for a listing on the junior Kosdaq with a plan to start the IPO process in May and June after obtaining approval in April. KB Securities and Shinhan Investment Corp. manage the offering.

ESG BENEFICIARY SUNGEEL HITECH

SungEel HiTech Co., a lithium battery recycling company, is seeking a listing. SungEel, founded in March 2000, started as a precious metal recycling firm but changed its focus on the waste battery sector in 2008.

It has operations in other countries such as the US, China, India, Hungary and Malaysia. Its Hungary plant, established in July last year, is the largest in Europe with an annual recycling capacity of 60,000 tons of used batteries.

SungEel extracts core battery materials including lithium, nickel, cobalt, manganese and copper from electronics wastes such as EV batteries, laptops, and mobile phones. The company supplies those materials to cathode producers. Its clients include not only South Korean battery makers such as LG Energy Solution Ltd., Samsung SDI and SK Innovation but also Hyundai Motor Co., Hyundai Glovis Co. and Samsung C&T Corp.

The company was estimated to have earned some 10 billion won in operating profit with sales of 140 billion won last year. That compared with an operating loss of 6.3 billion won and sales of 66 billion won in 2020.

The brokerage sector valued SungEel at some 500 billion won, given potential surges in raw materials prices amid a lack of supply. Some analysts expected the company to become a beneficiary of the growing interests in environmental, social and governance (ESG), given the global focus on eco-friendly sectors.

“Investors are highly interested in SungEel HiTech’s listing as the waste battery recycling market is rapidly growing while there are not many companies that have related technologies and know-how,” said an IB industry source.

BUMHAN, SHINHWA

Companies in the next-generation battery sector also planned Kosdaq listings.

Bumhan Fuel Cell Co. has been waiting for approval after filing a preliminary review in October last year. The company, which has developed fuel cell stack modules optimized for submarine application, is expanding the technology to fuel cell systems for buildings.

In addition, Shinhwa IT Co., a lead tab maker, is selecting underwriters for a listing in 2024. A lead tab is an electrode terminal that connects the cathode and the anode to flow electricity.

SK On Co., a battery maker spun off from SK Innovation, had planned an IPO in 2023 but postponed it amid controversy over parent-subsidiary listings.

The company is seeking to raise 4 trillion won in a pre-IPO share sale to finance facility expansion with BlackRock, Blackstone, Singapore's GIC and Saudi's Public Investment Fund (PIF) among the preliminary bidders for the stocks.

“It is widely expected to go public after 2024 since it needs massive funds for the battery business,” said an industry source.

Write to Ye-Jin Jun at ace@hankyung.com
Jongwoo Cheon edited this article.