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SK Lubricants draws Japan's refiner Enoes, three PEFs

Mar 12, 2021 (Gmt+09:00)

SK Lubricants' SK ZIC brand
SK Lubricants' SK ZIC brand
Japan's biggest refiner Enoes Corp. is one of the four final bidders for a minority stake in South Korea's SK Lubricants Co., wholly owned by SK Innovation Co.

The US-based Apollo Global Management and two South Korean private equity firms --
IMM Private Equity and Korea Investment Partners -- submitted binding bids for a stake in the lube base oil supplier as well, according to investment banking sources on Mar. 12.

SK Innovation put up to a 49% stake in SK Lubricants up for sale last year to raise new funding to expand its electric vehicle battery business.

It estimates SK Lubricants’ enterprise value at more than 5 trillion won ($4.5 billion) and hopes to raise at much as 2.5 trillion won from the stake sale.

SK Lubricants attracted a total of seven preliminary bidders late last year. The four final, shortlisted bidders performed due diligence on the world's largest high-end lube base oil supplier for more than two months. 

A preferred buyer is likely to be named next month at the earliest. But a deal close may take much longer than other stake sales, given that the bidding groups differ widely in bidding price and detailed conditions for the non-management stake.

Accordingly, the selling side, led by the sale manager Citigroup Global Market Securities, is in individual negotiations with each of the potential buyers, according to the sources.

Japan's Enoes is touted as a strong candidate because it is SK Lubricants' major client and has been in a business relationship with the Korean company through a joint venture.

For their part, the three financial investors are keen to acquire a stake in SK Lubricants, lured by its cash-generating ability. For IMM PE, it is the first investment target of its credit fund launched last year. Korea Investment Partners hopes to diversify beyond its venture capital investments by investing in the lubricant maker.

SK Lubricants sells products under the SK ZIC brand. It has the world's third-largest capacity, running plants in Indonesia, Spain and Ulsan, South Korea.

In 2019, it posted 294 billion won in operating profit and 428 billion won in EBITDA. Lube base oil makes up more than 80% of its sales.

The previous attempts by SK Innovation to make public SK Lubricants in 2013, 2015 and 2018 fell through due to a valuation gap between the company and investors. Its 2015 negotiations with MBK Partners to sell SK Lubricants also broke down. MBK had reportedly valued SK Lubricants at 3 trillion won, below SK’s estimate.

Write to Chae-Yeon Kim at

Yeonhee Kim edited this article.

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