SK Square makes its first exit seeking new target firms

South Korean investment firm SK Square Co. has sold all of its shares in Korean biotech NanoEntek Inc., a 28.4% stake, for 58 billion won ($44.3 million).

SK Square, formerly the largest shareholder of NanoEntek, disposed of all the 7.6 million shares with a premium of management rights to Korean private equity firm J&W Partners, NanoEntek disclosed on July 19.   

SK Square, a spin-off from Korean leading mobile carrier SK Telecom Co., bought NanoEntek shares in 2011 for 25 billion and also injected 7.8 billion won in a rights issue in 2013.

Listed on the secondary bourse Kosdaq, NanoEntek makes in-vitro diagnostic devices and blood cell counters.

Last year, it became the first Korean biotech to launch tester kits in Europe that can diagnose COVID-19 and flu simultaneously. The biotech’s sales on a consolidated basis were 35.8 billion won in 2021, 22% up from the previous year, and net profit reached 7.3 billion won, with a 168% increase on-year.

The deal was SK Square’s first divesting since the investment firm was launched in November 2021.

Currently managing 19 portfolio corporates, SK Square is expected to realize some capital gains and invest in new target firms. It has invested in the metaverse, virtual humans, agriculture tech, cryptocurrency and other fast-growing sectors.   

For new investments, SK Square is planning to secure more than 2 trillion won in three years from various sources such as capital gain, stock dividends and limited partners’ investment participation.

SK Square acquired 225 billion won and 50 billion won from chipmaker SK Hynix Inc.’s annual dividend and data-driven tech firm SK Planet Co.’s, respectively, the investment firm disclosed in May.

SK Square will inject the capital gain from NanoEntek shares sale into chipmaking and information and communication technologies (ICTs) as more firms in those sectors are undervalued amid the economic uncertainties.

“The more undervalued firms are, the more profits investors can gain – SK Square may close an M&A deal in the second half of this year or early 2023,” an IB source said.

Write to Han-Gyeol Seon at always@hankyung.com
Jihyun Kim edited this article.