SK Nexilis poised to sell thin film division to Affirma Capital

SK Nexilis Co., the world’s largest copper foil maker, is in the final stage of negotiations to sell its thin film manufacturing division to Affirma Capital. The move is part of efforts to prop up the copper foil business grappling with a slowdown in electric vehicle demand, according to people familiar with the matter on Monday.

SK Nexilis, wholly owned by chemical materials maker SKC Ltd, is expected to close a deal with the Seoul-based private equity firm to shed its flexible copper-clad laminate (FCCL) business, worth about 100 billion won ($72.3 million), as early as November, the sources told Market Insight, the capital market news outlet of The Korea Economic Daily.

FCCL, commonly called thin film, is a thin, flexible copper sheet. They are key materials in smartphone and TV displays as well as advanced telecommunication equipment.

One of the SK Group arm’s profitable mainstay businesses, the FCCL division has raked in 50 billion won to 60 billion won in revenue annually with earnings before interest, tax, depreciation and amortization (EBITDA) of around 10 billion won.

The upcoming sale comes as SK Nexilis seeks to raise fresh capital to fund the overseas expansion of its copper foil facilities.

It is now in separate talks with private equity firms to sell new shares in itself. But they are drawing lukewarm interest amid a drop in EV battery demand.

AFFIRMA CAPITAL'S CARVE-OUT DEALS

Affirma Capital is betting on the FCCL market to grow in line with the rising demand for high-resolution screens embedded in cars and refrigerators.

The buyout firm has built a track record of carve-out deals for large business groups’ non-core assets and expanded them in bolt-on acquisitions.

In 2016, Affirma purchased a water management business from South Korea’s Kolon Group for 125.0 billion won and rebranded it as EMC Holdings.

Subsequent acquisitions of domestic waste management companies catapulted EMC Holdings into the top spot in the country’s waste treatment industry.

In 2020, Affirma sold EMC to SK Ecoplant Co., formerly SK Engineering & Construction Co. Ltd., for 1.05 trillion won.

Korea’s energy-to-telecom conglomerate SK Group controls hundreds of companies across four mainstay sectors: semiconductors and materials; energy and chemicals; information and communications technology; and logistics, services and bio.

After PE-funded expansion over the past few years, the country’s No. 2 conglomerate is now stepping up its restructuring. In April, SK Networks Co. sold a 100% stake in SK Rent-a-Car Co. to Affinity Equity Partners for 820.0 billion won. 

SK Inc., the group’s holding company, has been in talks with another homegrown buyout firm, Hahn & Co., to sell specialty gas producer SK Specialty Co. for about 4.3 trillion won.

It has also launched the process of unloading SK IE Technology Co. and SK Enpulse Co., an electronics parts maker. It plans to merge AI semiconductor-related companies into one entity.

SK Ecoplant Co., a construction engineering and waste management company, recently jettisoned its entire stake in US-based lithium-ion battery recycling firm Ascend Elements Inc. to Seoul-based PE house SKS Private Equity for about $98 million.

STAKE SALES

In April, resources developer SK Earthon Co. sold its entire 20% stake in Peru LNG Co. to US liquefied natural gas company MidOcean Energy LLC for $256.5 million.

The same month, investment management firm SK Square sold its entire 2.2% stake in Korean gaming behemoth Krafton Inc. for 272.5 billion won through a block trade.

Write to Jong-Kwan Park, Ji-Eun Ha and Hyeon-woo Oh at pjk@hankyung.com
 

Yeonhee Kim edited this article.