By Kane Wu and Heekyong Yang
HONG KONG (Reuters) -The electric vehicle (EV) battery business of South Korea’s SK Innovation Co Ltd, SK On, has begun a new funding round, targeting 2 trillion to 3 trillion won ($1.6 billion to $2.4 billion), said two people with knowledge of the matter.
The fundraising will mainly target international investors, said the people, one of whom said the company aims to finalise the fundraising as early as March-end.
SK On’s last funding round was in December when it raised 2 trillion won from SK Innovation and 800 billion won from Korea Investment Private Equity and others. An eventual initial public offering (IPO) was baked into agreements, SK Innovation said.
That round valued the business at 22 trillion won, said one of the people, who declined to be identified as the information is confidential.
A spokeswoman declined to comment on valuation but said SK On expects up to an extra 500 billion won from private equity funds this year as part of the December fundraising. She said the amount and schedule for the latest fundraising have not been set. SK Innovation was not immediately available for comment.
The new call for funding represents further effort by the energy group to boost its EV battery business in anticipation of rapid electrification in the auto industry.
SK Innovation on Tuesday said it would focus spending on growing SK On this year even as the business was taking longer than it expected to turn a profit. It said SK On accounted for 15% of fourth-quarter group revenue.
SK On makes batteries in South Korea, China, Hungary and the United States for clients including Ford Motor Co, Volkswagen AG and Hyundai Motor Co.
It lost money last year as it navigated challenges including a global chip shortage, rises in raw material prices and labour costs, unfavourable currency exchange rates and delayed production increases at its U.S. and Hungarian factories.
It expects to book a profit in 2024, its chief financial officer said on Tuesday.
Analysts said a U.S. EV subsidy has kindled interest in battery firms targeting the United States, and that SK On’s U.S. plants would be particularly appealing to global investors.
SK On’s cross-town rival LG Energy Solution Ltd last month offered a positive outlook in the North American market, where it sees increasing requests for made-in-USA batteries to qualify for subsidies.
($1 = 1,262.4800 won)
(Reporting by Kane Wu in Hong Kong and Heekyong Yang in Seoul; Editing by Christopher Cushing)
