Skip to content
  • KOSPI 2745.82 -9.29 -0.34%
  • KOSDAQ 910.05 -1.20 -0.13%
  • KOSPI200 373.22 -0.86 -0.23%
  • USD/KRW 1349.5 -1.5 -0.11%
  • JPY100/KRW 891.79 -0.93 -0.1%
  • EUR/KRW 1458.54 -4.26 -0.29%
  • CNH/KRW 185.84 -0.41 -0.22%
View Market Snapshot
Capital raising

SK E&S seeks global IB to raise up to $3 bn in 2021

By Apr 16, 2021 (Gmt+09:00)

3 Min read

SK E&S seeks global IB to raise up to  bn in 2021
SK E&S Co. will hire a global investment bank to launch the process of raising 2 trillion-3 trillion won ($2 billion-$3 billion) in new capital within the year. The South Korean company plans to use the proceeds for hydrogen and renewable energy businesses, including its overseas gas field investments.

The energy company is sending a request for proposals (RFP) to global investment banks to select one as an advisor within the month, the company said on Apr. 16. They will be asked to come up with the most feasible funding plan and financial solutions optimized for SK E&S, 90% owned by SK Holdings Co., their parent group's holding company.

Their proposals should not include selling stakes in sister companies or subsidiaries, nor any measure that could affect its governance structure.
A suitable candidate must have a high degree of understanding of the recent financial market conditions awash with liquidity, to aid in the Korean company's global expansions. 

Together with the advisor to be selected, SK E&S will raise equivalent to 20-30% of its total assets, or 2 trillion to 3 trillion won, at home and abroad. Further, the company hopes to enhance its financial structure and eventually achieve credit rating upgrades.

"This time, we will hire a financial solutions advisor with innovative ideas and action plans with an aim to strengthen our financial portfolio and preemptively to prepare investments in new growth areas," said an SK E&S source. 

RATING CUTS

This week, Moody's downgraded SK E&S's domestic credit rating by one notch to double-A from double-A plus, after it cut the unlisted company's global rating to Baa3 from Baa2 in January this year. The US rating agency cited SK E&S' aggressive investment and dividend payment policy which would continue to undermine its financial conditions.

"While its combined cycle power plant is under construction for a total investment of around 1 trillion won, the company decided to make an early-stage investment in Australian gas fields," said Moody's. "Given that its renewable energy businesses are in their early stages, the company's earnings volatility may increase, depending on the investment outcome."
(Courtesy of SK E&S)
(Courtesy of SK E&S)
Last month, SK E&S announced a $1.4 billion investment in a gas field development project offshore northern Australia in which it has a 37.5% stake.

The investment decision followed its $1.6 billion purchase of a 10% stake in US hydrogen fuel cell maker Plug Power Inc. in February.

As part of capital-raising plans, SK E&S had decided to sell up to a 49% stake in its city gas businesses while maintaining management rights earlier this year.

The divestment decision followed a recent string of asset sales by its parent group, as the energy-to-telecom conglomerate has been accelerating its shift from the traditional and once flagship petrochemical businesses to focus on new growth areas such as electric vehicle batteries, hydrogen fuel, bio and chips.

Since last year, SK Group has been stepping up efforts to make maximum use of its assets through initial public offerings and stake sales, as long as it keeps their management rights. Funding secured from the divestiture will be diverted into growth businesses, in particular, into assets that align with the group's environmental, social and governance (ESG) management aims.

Write to Jun-ho Cha and Eun-Jung Kim at chacha@hankyung.com
Yeonhee Kim edited this article.
More to Read
Comment 0
0/300