SK Innovation Board Approves SK On Long-Term Financial Investment Contract
SK On has secured an additional investment of up to 1.24 trillion KRW. Having successfully raised a cumulative total of 4.44 trillion KRW, SK On plans to accelerate the expansion of its factories to target the global market.
On the 24th, SK Innovation held a board meeting and announced that it approved the signing of a shareholder agreement to attract an investment of 944 million USD (approximately 1.24 trillion KRW) for SK On. This agreement is planned to be signed between SK On, SK Innovation as the major shareholder of SK On, and the MBK consortium. The MBK consortium includes financial investors (FIs) from the United States and the Middle East. The investment size from the MBK consortium is 800 million USD (approximately 1.05 trillion KRW).
In addition, Saudi Arabia will participate in the investment through the Korea Investment PE and East Bridge consortiums, which had previously decided to invest. SNB Capital, a subsidiary of Saudi Arabia's largest commercial bank, Saudi National Bank (SNB), will invest up to 144 million USD (approximately 190 billion KRW). Combining the investment amounts from the MBK consortium and SNB Capital reaches 944 million USD.
SK On had previously raised 1.2 trillion KRW through the Korea Investment PE and East Bridge consortiums by March of this year. Additionally, it received a 2 trillion KRW investment from its parent company, SK Innovation. Including this latest investment, SK On has successfully raised a cumulative total of 4.44 trillion KRW. SK On originally planned to raise 4 trillion KRW through a pre-IPO, but has exceeded that target.
SK On plans to use the secured funds to accelerate the expansion of its sole and joint venture factories both domestically and internationally. SK On operates electric vehicle battery factories in Korea, the United States, China, and Hungary. As of the end of last year, its annual production capacity was 88 gigawatt-hours (GWh), and it plans to increase this to at least 220 GWh by 2025.
In particular, SK On is targeting the rapidly growing North American electric vehicle market based on the U.S. Inflation Reduction Act (IRA). SK On's cumulative order backlog amounts to 300 trillion KRW, with a significant portion estimated to be supplied to North America.
SK On produces batteries in North America through its sole battery production subsidiary, SK Battery America (SKBA), and is promoting a joint venture factory with Ford called BlueOvalSK with a capacity of 129 GWh. It is also pursuing a 35 GWh joint venture factory in Georgia with Hyundai Motor Group.
Additionally, on this day, SK Innovation disclosed a payment guarantee for SK On's borrowing of 2 trillion KRW from Hyundai Motor Company and Kia. An SK Innovation official stated, "SK On is enhancing the stability of its financing through various funding methods, and customers are expected to benefit from synergy effects such as stable procurement of battery cells and strengthening of strategic partnerships."
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