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Money-losing SK on scrambles to hire capital market experts

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Park Sung-uk, SK on's legal adviser
Park Sung-uk, SK on's legal adviser
By Park Jae-hyuk

SK on, the electric vehicle battery manufacturing subsidiary of SK innovation, has been rushing to hire capital market experts from law firms, investment banks and consulting firms after failing again to make money in the first quarter, according to industry officials, Tuesday.

Last month, the company appointed foreign attorney Park Sung-uk from law firm Yoon & Yang as vice president in charge of legal advice.

Park, who graduated from Harvard Law School, has been known as a cross-border deal expert, having built his career at British law firm Allen & Overy, New York-headquartered law firm Schulte Roth & Zabel and Korea's largest law firm, Kim & Chang.

He advised on the acquisition of an iron ore mine in Canada by a POSCO-led consortium, the sale of Oriental Brewery and Delivery Hero's acquisition of Woowa Brothers.

SK on explained that his appointment was intended to better prepare for financing and the forthcoming IPO in the medium to long run.

Another capital market expert who joined SK on recently was Vice President Park Roh-hoon, who was a CJ Logistics executive in charge of M&A strategies, based on his experience at JPMorgan and Mirae Asset Securities.

He is expected to work with Vice President Kim Ji-nam, who handled M&As at KB Securities.

In February, SK on also hired former PwC Partner Kwon Sang-han as a vice president.

SK Group's headquarters in Seoul / Korea Times file
SK Group's headquarters in Seoul / Korea Times file

Its continuous reinforcement of market specialists has been widely interpreted as part of efforts to counteract the growing skepticism about the battery maker's ongoing pre-IPO, intended to attract up to 4 trillion won ($3.1 billion) in investments from global private equity firms.

Last month, SK innovation's regulatory filing showed that SK on had suffered an operating loss of 273.4 billion won during the first quarter of this year.

"We may not be able to reach the breakeven point by the fourth quarter, because of the shortage of automotive semiconductors, rising material costs and increasing payrolls," SK on Executive Vice President Jin Seon-mi also said during last month's conference call on its first-quarter earnings.

Since then, concerns have emerged about the possible reluctance of Carlyle, KKR, BlackRock and GIC ― which were shortlisted earlier this year for the main bid to participate in SK on's pre-IPO ― to bet large on the Korean firm's fundraising.

The potential investors will also have to wait for at least three years to generate profits from their investments in SK on, as the company confirmed that it will not go public until 2025.

In addition, the worsening investor sentiment resulting from rising interest rates and the economic slowdown is mentioned as another unfavorable factor for SK on's fundraising.

"Investors should assess SK on's valuation from a longer-term perspective," Mirae Asset Securities analyst Lee Jin-ho said.

Lee An-na, an analyst at eBest Investment & Securities, said that SK on's rapid expansion of its manufacturing capacity could cause continuous concerns among market insiders about the company's fundraising plan.

SK on's parent firm, however, emphasized that it will be able to secure enough cash for investments in SK on from a joint venture with Ford.

"We will also raise money through the pre-IPO and battery sales," SK innovation Chief Financial Officer Kim Yang-seob said during the conference call last month.

Park Jae-hyuk

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