SK Ecoplant's pre-IPO enjoys attention from wealthy individuals

The pre-initial public offering of SK Ecoplant Co., formerly known as SK Engineering & Construction Co., is becoming a hot topic in private banking circles within Seoul's upscale Gangnam district. 

Some wealthy individuals have competitively joined the pre-IPO investing, even though pre-IPOs, in general, are open only to institutional investors due to the amount of funding needed. The pre-IPO of the construction unit of South Korean conglomerate SK Group, is expected to distribute more than double returns in a year as well as minimize the risk of capital loss, attracting some rich individuals in Gangnam.  

Its pre-IPO reached 800 billion won ($651.2 million), set to sell 600 billion won worth of newly issued convertible preferred stocks (CPS) and 200 billion won worth of shares owned by its chemical affiliate SK Discovery Co. The weighted average price per share is calculated as 94,700 won, and the corporate value after the pre-IPO is estimated to be 4 trillion won.  

Four Korean financial investors participated in the pre-IPO funding -- Premier Partners LLC will invest 280 billion won; Ium Private Equity and the consortium of Brain Asset Management Co. and NH Investment & Securities Co. will inject 200 billion won each; and Find Value Asset Management will put in 120 billion won.

Find Value is understood to sell part of the 120 billion won project fund to retail investors and look for securities firms to undertake the sales. The private fund will allow participation from individuals who can each commit to 300 million won or more. 

Deep-pocketed investors are hopeful for more than double their return after the IPO in the second half of 2023. The lead manager candidates are estimating the corporate value at the time of the IPO to be 8 trillion to 13 trillion won.

The investors were also attracted by the pre-IPO’s stability as SK Ecoplant will gradually raise the CPS’ dividend rate if it fails to go public in a certain period. 

Formerly SK E&C, SK Ecoplant was renamed in May 2021 as part of shifting its identity to an environmentally friendly company. It acquired Korea’s largest waste treatment company EMC Holdings Co. for 1 trillion won in 2020 and bought Singapore-based electronic waste disposal and recycling company TES-Envirocorp Pte for 1.2 trillion won in February of this year. Its IPO success depends on how the market will evaluate these efforts in enhancing its ESG business.

(Updated with Find Value Asset Management)

Write to Jun-Ho Cha at chacha@hankyung.com
Jihyun Kim edited this article.