Ssangyong Motor Nears Preferred Bidder Selection... Can It Survive Until Rehabilitation and New Model Launch?

"Not Only the Acquisition Amount but Also Consistent Investment Is Important in Selecting the Preferred Negotiation Partner"

[Asia Economy Reporter Ki-min Lee] With SM Group, a leading candidate in the acquisition battle for Ssangyong Motor, stepping out, the competition has narrowed down to three electric vehicle-related companies. Even if Ssangyong Motor is acquired, continuous investment will be necessary until its recovery, drawing attention to the investment capacity of the candidates.

According to industry sources on the 19th, EY Han Young Accounting Corporation, the main sales agent for Ssangyong Motor, will select one of the Edison Motors consortium, EL B&T consortium, or INDI EV as the preferred negotiation partner by the end of this month based on selection criteria agreed upon with the court, and proceed with the due diligence process.

At least 350 billion to 400 billion KRW is required to acquire Ssangyong Motor, but about 1 trillion KRW is expected to be needed to transition to the electric vehicle business and stabilize the company. In particular, Ssangyong Motor plans to launch new models such as the mid-size sports utility vehicle (SUV) J100 and the compact SUV KR10 while accelerating the shift to electric vehicles, making steady investment essential. A Ssangyong Motor official explained, "Not only the acquisition price submitted in the main bid but also the investment needed for future operations and business direction are important in selecting the preferred negotiation partner."

Therefore, attention is naturally focused on the investment capacity of Edison Motors consortium, EL B&T consortium, and INDI EV, who responded to the main bid. Edison Motors, an electric bus manufacturer that emerged as a strong candidate after SM Group's withdrawal, recently secured funding capability by attracting large private equity funds KCGI and Keystone Private Equity (PE) as financial investors (FI). Edison Motors has already announced that it secured 270 billion KRW from individual investors and others. Additionally, it plans to raise about 250 billion KRW through a paid-in capital increase and convertible bond (CB) issuance by SemiSisco, and receive about 400 billion KRW in investment from FIs to prepare acquisition funds. However, as of the end of last year, Edison Motors' sales were about 89.78763 billion KRW, roughly 1/30th of Ssangyong Motor's. Due to its smaller corporate size, concerns have been raised that it may be difficult to respond to risks if management conditions do not improve.

EL B&T, which is engaged in electric vehicle conversion business for commercial vehicles such as Labo and Porter, also has a self-developed model called EB1, a small electric vehicle, but its sales performance has not been disclosed. However, in June, it signed a memorandum of understanding with Saudi state-owned company SIVC (Saudi International Industrial Village Company) for the Saudi Korea Industrial Complex project. Recently, it also formed a consortium with Cardinal One Motors, founded by Duke Hale, the founder of HAAH Automotive, the previous preferred negotiation partner, and private equity fund Pavilion PE.

INDI EV, an American electric vehicle venture company established in August 2017, plans to mass-produce a next-generation mid-size all-wheel-drive crossover vehicle (code-named ATLAS) equipped with autonomous driving features in 2023. According to INDI EV's management plan, if it acquires Ssangyong Motor, it intends to establish a foundation to produce 1 million vehicles annually at the Pyeongtaek plant. Although it has no concrete performance yet as it has not acquired the vehicles, INDI EV is another affiliate of Snail Group, the parent company of Snail Games, a famous Chinese gaming company, and claims to have sufficient investment capacity with its own funds.