SK Inno Launches Preliminary Bidding for Pre-IPO Fundraising Ahead of Listing

February Pre-IPO Preliminary Bidding Underway
Global PEFs Including KKR, Carlyle, TPG Show Interest
"Not Considering Listing Currently... Proceeding Carefully Without Rushing"

[Asia Economy Reporter Hwang Yoon-joo] SK Innovation's battery subsidiary, 'SK On,' will conduct a preliminary bidding for a pre-IPO (pre-initial public offering) next month. All funds raised through this will be invested entirely in the battery business.

According to industry sources on the 30th, SK Innovation has selected JP Morgan and Deutsche Securities as lead managers and will accept preliminary pre-IPO bidding documents in the second week of February. The fundraising scale is 3 to 4 trillion KRW.

The lead managers reportedly sent teaser letters mainly to global private equity funds such as TPG, KKR, and The Carlyle Group. Considering the investment scale, it is judged that global PEFs with strong financial power have an advantage. If financial investors (FIs) evaluate SK On's corporate value at 30 trillion KRW, the equity dilution from the pre-IPO is expected to be limited to around 10%.

[Image source=Yonhap News]

SK On plans to invest the funds raised through the pre-IPO in expanding overseas battery factories. The region receiving the most attention is the United States. This is based on the judgment that the electric vehicle market will rapidly grow in the U.S. due to the Biden administration's full support. As part of this, SK On announced plans to establish a battery joint venture with Ford, a U.S. automaker. The investment scale alone reaches 13 trillion KRW. Production capacity will be gradually expanded from 60GWh. A 60GWh capacity can produce 600,000 electric pickup trucks (based on 100KWh each). In addition, investments will continue to expand battery production capacity in Europe, China, and other regions. SK On has revised its battery production capacity target upward from 60GWh to 77GWh by the end of this year. If this trend continues, there is also optimism that the goal of expanding global production capacity to 200GWh+α by 2025 can be accelerated.

SK Innovation announced that this year's capital expenditure (CAPEX) scale is between 6 trillion KRW and 6.5 trillion KRW. Of this, 4 trillion KRW will be used for SK On's battery business, and 1 trillion KRW will be allocated to expanding separator production capacity. This reflects SK Group's strong commitment to the battery business.

SK On's external growth is remarkable. Battery business sales recorded 1.6102 trillion KRW in 2020 and 3.0398 trillion KRW in 2021. The sales target for this year is set at 6 trillion KRW. It is expected to achieve its first break-even point (BEP) in the fourth quarter of this year.

SK On has reiterated that it currently has no plans for an IPO. During the earnings conference call on the 28th, SK Innovation stated, "Considering SK On's growth potential and the pace of profitability improvement, we plan to make a careful decision without rushing."

This content was produced with the assistance of AI translation services.