Reasons SK On's Pre-IPO Attracted Foreign Investors

More Flexible Investment Tendencies Than Domestic Investors
Large-Scale Capital... Trillion-Won Level Investments Possible
Strategic Moves for IPO Company Valuation

[Asia Economy Reporter Hwang Yoon-joo] SK On's strategy of attracting funds primarily from foreign investors is interpreted as a move to secure large-scale funding and lay the groundwork for a future IPO.

According to the investment banking (IB) industry on the 8th, global investors such as The Carlyle Group, Kohlberg Kravis Roberts (KKR), and Texas Pacific Group (TPG) have submitted letters of intent (LOI) for SK On's pre-IPO (pre-listing equity investment) preliminary bidding.

There are three main reasons why SK On prioritizes foreign investors as preferred negotiation partners. First, domestic investors tend to have relatively stringent investment conditions. In the case of domestic private equity funds (PEFs), it is common to propose various conditions such as target returns of 10-20% and internal rate of return (IRR) guarantees of 4-7%. A private equity fund official explained, "Domestic PEFs are more conservative and aim for safer investments than global PEFs because institutional investors like the National Pension Service manage their funds."

The second reason is financial capacity. Through the pre-IPO, investors are expected to hold about a 10% stake, and SK On plans to raise funds ranging from a minimum of 2 trillion won to a maximum of 5 trillion won. Although the number of domestic PEF managers with large funds exceeding 2 trillion won has increased compared to the past, firms like MBK, Hahn & Company, IMM PE, and Stick Investment remain among the few.

An IB industry official said, "Even if investors are recruited through a club deal (involving multiple private equity funds), each PEF must invest at least 500 billion to 1 trillion won, but differing interests among PEFs make this difficult," adding, "Most fund managers capable of investing at least trillion-won units in a single fund are foreign firms."

There is also an interpretation that this is a strategic move for an IPO. Although SK On has officially stated, "We are not currently considering an IPO," the industry expects the listing to occur within two years at the latest. Recently, IPO discussions have become sensitive due to criticism of 'physical division split listings,' and it is believed that the IPO cannot be postponed indefinitely.

Another IB industry official said, "When SK On prepares for an IPO, it can receive a higher corporate valuation based on the investments from global PEFs participating in the pre-IPO," adding, "Since PEFs participate in the preliminary bidding with this in mind, without an IPO commitment, they may demand more conditions such as put options to guarantee returns."

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