Korean battery maker SK On attracts $400 mn from Hillhouse
Jun-Ho Cha
Jun 08, 2023 (Gmt+09:00)
SK On cells for Hyundai IONIQ 5 and Kia EV6 (Courtesy of SK On) South Korean battery maker SK On Co. has secured $400 million from Hillhouse, a Singapore-headquartered asset management firm, investment banking sources said on Thursday.
SK Innovation Co., the parent of the world’s fifth-largest battery maker, approved the new share issuance funding plan during its June 8 board meeting.
SK On will use the funds to expand its global production facilities. It aims to increase annual capacity production from 88 gigawatt hours (GWh) as of end-2022 to 220 GWh in 2025.
SK Innovation, the refinery and chemicals unit of Korea's No. 2 conglomerate SK, is seeking the battery maker’s IPO by the end of 2026.
BATTERY YIELD
SK On is striving to enhance its battery yield, or its percentage of non-defective products. The cell producer posted 344.7 billion won in operating loss during the first quarter of this year, primarily due to its lower yield than its competitors' and increased investments in manufacturing plants.
The company increased yield and production volumes from the US and China in earnest from the first quarter, said Yoon Yong-sik, an analyst at Hanwha Investment & Securities Co.
The battery maker has secured a total of 4.8 trillion won since its inception in 2021, meeting its goal to raise more than 4 trillion won for a pre-IPO. The funds will decrease the company's debt ratio, which was 193.4% as of the first quarter of this year.
SNB Capital, a subsidiary of Saudi National Bank (SNB) also poured in 190 billion won earlier this year. SK On was valued at 25 trillion won in each funding round, sources said.