SK Innovation may list battery business, echoing rival LG Chem

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SEOUL — South Korea’s SK Innovation Co Ltd mentioned it’s contemplating spinning off and itemizing its rising battery enterprise, taking a web page out of rival LG Chem Ltd’s playbook that’s on observe to listing its battery unit this yr.

The transfer, introduced by SK Innovation CEO Kim Jun on Thursday, comes as demand for electrical autos (EVs) surges and carmakers accomplice with battery makers to make sure uninterrupted provides.

International EV gross sales are set to extend by 70% this yr, based on IHS Markit, after hitting an anticipated 2.5 million in 2020.

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“We haven’t determined the right way to break up the battery enterprise … it takes various sources to additional develop our rising battery enterprise, so we’re contemplating the spin off as one of many methods to safe sources,” Kim mentioned, including he’ll evaluation whether or not to listing solely on Nasdaq or go for a twin itemizing in america and South Korea.

SK, which provides batteries to Ford Motor Co, Volkswagen AG, Hyundai Motor Co and amongst others, additionally mentioned it goals to extend its annual battery manufacturing capability to 200 gigawatt-hours (GWh) in 2025, up 60% from a beforehand introduced purpose of 125 GWh. Its present capability is 40 GWh.

However the firm’s shares – which had climbed some 28% this yr as much as Wednesday’s shut on expectations that the battery enterprise can be worthwhile after years of losses – fell as a lot as 9.3% to a three-week low after the announcement.

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Analysts mentioned with out the battery enterprise, SK Innovation would simply be left with its typical petrochemical enterprise, which traders don’t discover as engaging.

In September, LG Chem mentioned it will separate its battery enterprise, which provide batteries for Tesla Inc and Basic Motors Co, into a brand new firm, LG Power Answer. Shares of LG Chem have jumped greater than 30% since September, buoyed by its chemical enterprise resulting from sturdy materials demand.

LG Power Answer final month utilized for preliminary approval for an preliminary public providing (IPO) that publication IFR mentioned might elevate $10 billion – $12 billion.

SK Innovation’s battery enterprise chief Jee Dong-seob mentioned a speedy spin off would give the corporate extra funds to broaden the enterprise, however added it had not but selected particulars or a timeline.

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SK’s battery enterprise goals to safe greater than a fifth of the worldwide EV battery market by 2030, Jee mentioned, including the battery cell three way partnership introduced in Might between the corporate and Ford Motor might produce as much as 180 gigawatt-hours by 2030.

The South Korean battery maker additionally mentioned it has greater than 130 trillion received ($115 billion) value of battery orders, which is greater than 1 terawatt hours (TWh) value of batteries, which might energy about 14 million electrical autos.

The corporate has battery manufacturing websites in america, Hungary, China and South Korea. ($1 = 1,130.1600 received) (Reporting by Heekyong Yang; Further reporting by Jihoon Lee; Enhancing by Christian Schmollinger, Stephen Coates and Ana Nicolaci da Costa)