SK IE Technology, the battery materials affiliate of SK Innovation, is planning to raise about $2 billion in an IPO on Seoul’s stock market in May as the company ramps up production to meet increasing demand for electric car batteries and other related products. The company will be floating 21.4 million shares in mid-May in a price band from 78,000 won to 105,000 won per share, with the price fixing scheduled after book building.
The IPO will be Seoul’s largest in four years, after Netmarble Games raised 2.7 trillion won in May 2017. SK IE is a baby of SK Innovation, a petroleum and auto battery producer, founded in 2019. SK Innovation has a 90% stake in SK IET, which is involved in producing separation membranes for lithium-ion batteries and film materials for organic light-emitting diode panels.
According to the CEO, Roh Jae-sok, the proceeds of the IPO will be used for expanding the production lines at its factory in Poland amidst growing demand in Europe. The company is looking to boost output due to increasing shipments of electric vehicles and OLED panels.
“We will use the proceeds from this IPO for the required annual investments of between 700 billion won and 800 billion won,” Roh said at a news conference on Thursday. “The investments are very large scale, so our cash flow is not enough to cover them by 2023.”
The announcement is coming two weeks after SK Innovation reached a settlement to pay 2 trillion won to LG Energy Solution, putting an end to their two-year legal dispute in the United States over misappropriation of trade secrets in EV batteries.
Analysts say the offering will help in solidifying SK IET’s position in the separators market as the company must make huge investments to catch up with the two leaders in the sector. SK IET is the #3 player in the global separators market with a 10% share of the market, with China’s SEMCORP leading the wat with 18% share and Japan’s Asahi Kasei, at 15%.
“SK IET possesses a high level of technology,” said Lee Ji-yeon, an analyst at Shinyoung Securities. “The market is tough for newcomers as it requires years to acquire safety qualification, and market leaders invest hugely to reduce costs and maintain advanced technology.”
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