SK Innovation’s battery arm secures $258 mn in pre-IPO placement

SK Innovation Co.’s wholly owned subsidiary SK IE Technology Co. (SK IET) is set to fetch 300 billion won ($257.6 million) in a pre-IPO placement from Premier Partners, a local fund management company, according to the investment banking industry on Sept. 22.

SK Innovation will seek approval for the placement at a Sept. 23 board meeting. The company plans to use the funds to bolster its electric vehicle (EV) battery business, identified as the company’s future growth engine.

In particular, SK Innovation will focus on increasing EV battery production capacity as it aims to be among the top three players in the global EV battery market by 2025.

SK Innovation has injected over 3 trillion won to operate production facilities across four countries, including South Korea, the US, Hungary and China.

The company plans to increase its annual EV battery production capacity from the current 4.7GWh to 100GWh by 2025, which will require over 6 trillion won. Global EV battery supply is expected to reach around 776GWh in 2023, but actual demand is predicted to be around 916GWh.

SK IET's plan to go public next year is part of SK Innovation's efforts to raise investment capital for its EV business. The securities industry estimates the company's value between 2.5 trillion and 5 trillion won, meaning a 10% stake sale in the public offering process could raise around 300 billion won for the company.

Also earlier in August, SK Innovation put its lube base oil supplier SK Lubricants Co. up for sale to expand its rechargeable EV battery business.

In April 2019, SK Innovation spun off its lithium-ion battery separator unit (LiBS) into SK IET. The newly established company’s core business includes the production and sales of flexible cover windows (FCW) and LiBS, a core material used in EV batteries and energy storage systems.

SK IET was the first South Korean company to develop lithium-ion battery separators in 2004, and the first in the world to develop the sequential stretching process technology in 2007. In 2019, the company posted 263 billion won in revenue with an operating profit of 80.6 billion won.

Meanwhile, Premier Partners has recently beefed up its involvement in large deals, a move away from its usual investments into startups. The local fund operates about 800 billion won in assets under management, set to reach 1 trillion won within the year.

By Chae-Yeon Kim and Ri-Ahn Kim

why29@hankyung.com