Korean battery SMEs rush for money to expand capacity

South Korean rechargeable battery-related companies are jumping into capital markets to raise money for capacity expansion as the fast-growing electric vehicle (EV) market boosts demand for such batteries. Even small and medium-sized enterprises (SMEs) have planned massive fundraising campaigns of late, joining such moves by major conglomerates such as LG, SK and POSCO.

EcoPro BM Co., a rechargeable battery materials company, announced on July 7 a plan to issue new shares to raise about 400 billion won ($348.7 million) in the second half. The company is also set to raise up to 120 billion won on July 19 in the corporate bond market. It will use all of the proceeds to expand cathode materials production facilities at home and abroad.

L&F Co., another secondary cell materials firm, is set to raise 496.6 billion won in new shares, the largest such issuance on the Kosdaq, at the end of this month. It raised 82.6 billion won in August of last year. L&F will use the money to boost its cathode materials capacity.

EcoPro BM and L&F are each expected to report more than 100 billion won in operating profit from next year, according to the brokerage industry.

SMEs are aiming to go public, hoping to raise hundreds of millions of dollars from stock markets for capital expenditure as orders have surged beyond their capacity on healthy EV demand. Enchem, an electrolytes maker, and GI Tech, a producer of electrode parts for rechargeable batteries, are under preliminary review for listing by the Korea Exchange. Both target listing in the second half. In the first quarter, Youil Energy Tech and Nsys Co. successfully went public with heavily oversubscribed share issues.

Earlier, POSCO Chemical raised 1.3 trillion won in new shares and SK IE Technology Co. (SKIET) secured 2.2 trillion won through an initial public offering (IPO). In addition, LG Energy Solution is expected to raise 10 trillion won via a planned IPO, the largest ever in South Korea.

Listed companies are predicted to secure funds more easily, given a prolonged rally in rechargeable battery-related stocks. It is simple to raise a large amount of money by using shares that have been climbing for more than a year.

“Rechargeable battery-related stocks are supported by expectations that earnings will significantly improve,” said an investment banking industry source. “It is the best time to secure ammunition and bolster business competitiveness.”

Write to Jin-Seong Kim at jskim1028@hankyung.com
Jongwoo Cheon edited this article.