SK Innovation could list battery business, echoing rival LG Chem

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The SK Innovation logo can be seen outside its headquarters in Seoul, South Korea on February 3, 2017. REUTERS / Kim Hong-Ji

  • SK Innovation to increase battery capacity
  • Potential spin-off announcement pushes stocks to three-week low
  • CEO plans dual listing in South Korea and US

SEOUL, July 1 (Reuters) – South Korean firm SK Innovation Co Ltd (096770.KS) has said it plans to split up and list its growing battery business, taking a page from its rival’s playbook LG Chem Ltd (051910.KS) which is on track to list its battery unit this year.

The move, announced Thursday by SK Innovation CEO Kim Jun, comes as demand for electric vehicles (EVs) grows and automakers partner with battery makers to ensure an uninterrupted supply.

Global sales of electric vehicles are expected to increase by 70% this year, according to IHS Markit, after hitting the expected 2.5 million in 2020.

“We haven’t decided yet how to split the battery business … it takes a lot of resources to further develop our growing battery business, so we are looking at the split as one of the ways to secure resources.” Kim said, adding that he will consider whether to register only on Nasdaq or opt for dual registration in the United States and South Korea.

SK, which supplies batteries to Ford Motor Co (FN), Volkswagen AG (VOWG_p.DE), Hyundai Motor Co (005380.KS) and among others, has also announced plans to increase its annual battery production capacity to 200 gigawatt hours (GWh) in 2025, up 60% from a previously announced target of 125 GWh. Its current capacity is 40 GWh.

But the company’s shares – which had climbed 28% this year until Wednesday’s close on expectations that the battery sector will be profitable after years of losses – fell 9.3% to a low. three weeks after the announcement.

Analysts said without the battery business, SK Innovation would end up with its conventional petrochemical business, which investors don’t find as attractive.

In September, LG Chem announced the separation of its battery business, which supplies batteries for Tesla Inc (TSLA.O) and General Motors Co (GM.N), into a new company, LG Energy Solution. LG Chem shares have jumped more than 30% since September, buoyed by its chemicals business amid strong demand for materials.

LG Energy Solution last month requested preliminary approval for an initial public offering (IPO) that the IFR publication said could raise $ 10 billion to $ 12 billion.

SK Innovation’s battery business chief Jee Dong-seob said a quick spin-off would give the company more funds to expand the business, but added that it had not yet decided on the details. or a calendar.

SK’s battery business aims to secure more than a fifth of the global electric vehicle battery market by 2030, Jee said, adding that the battery cell joint venture announced in May between the company and Ford Motor could produce up to 180 gigawatt hours by 2030. read more

The South Korean battery maker also said it has more than 130 trillion won ($ 115 billion) in battery orders, or more than one terawatt hour (TWh) of batteries, which could power around 14 million electric vehicles. .

The company has battery production sites in the United States, Hungary, China and South Korea.

($ 1 = 1,130,600 won)

Report by Heekyong Yang; Jihoon Lee Additional Reports; Editing by Christian Schmollinger, Stephen Coates and Ana Nicolaci da Costa

Our standards: Thomson Reuters Trust Principles.

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