(Bloomberg) — SK IE Technology Co., the battery materials unit of South Korean energy supplier SK Innovation Co., doubled in its Seoul debut Monday before paring about half of those early gains amid a broad selloff in Asian equities.
SK IE’s stock opened at 210,000 won ($188), compared with its offering price of 105,000 won, which was already at the top of its marketed range. It traded at 159,500 won as of 11:21 a.m. in Seoul, still 52% higher than the IPO price. South Korea’s benchmark equity index was down 1.6%.
SK IE Technology’s $2 billion IPO was the country’s biggest since mobile game-maker Netmarble Corp. raised $2.4 billion in 2017, according to data compiled by Bloomberg. The maker of battery separators attracted record levels of interest from both retail and institutional investors, underscoring continued hunger for first-time share sales in South Korea even as appetite abates elsewhere.
The company, which counts Panasonic Corp. and Samsung SDI Co. among its clients, plans to use the IPO proceeds to expand capacity at its Poland plant that will start production for European automakers later in the year.
While the near-term growth will remain in the EV battery separator business that will account for 80% of its revenues in the next three years, the company also plans to develop materials for solid-state batteries and expand production of polyimide films that go on flexible displays, Chief Executive Officer Rho Jae-sok said in April.
Hyunsoo Kim, an analyst at Hana Financial Investment Co., has a target price at 148,000 won for SK IE’s stock. The value premium can be slightly higher than the average of other battery materials suppliers given that the separators business requires heavy capital expenditure, according to Kim.
Institutional investors put in orders for a record 1,883 times the shares offered by SK IE Technology, beating other hot Korean IPOs in the past year in terms of demand, such as the 962.6 billion won listing of K-pop superstars BTS’s agency Big Hit Entertainment Co., which was more than 1,000 oversubscribed by institutional investors.
Mom-and-pop buyers also poured into SK IE Technology’s IPO, with 80.5 trillion won in bids for shares, according to IPO manager Mirae Asset Securities Co. That beat the previous record set in March by SK Bioscience Co., which drew 63.6 trillion won in retail bids.
The level of demand shows that the retail trading mania that became a feature of 2020 and led to several blowout IPOs is still strong this year. Analysts expect that enthusiasm to continue this year given South Korea’s loose monetary policy.
Several companies are queuing up to list to take advantage of the share sale boom and investor demand, leading to expectations of a record year for IPOs. Hopefuls include hit game developer Krafton Inc., LG Chem Ltd.’s battery business and KakaoBank Corp., Korea’s biggest mobile-only bank.
SK IE Technology is also expected to benefit from growing demand for electric vehicles. SK Innovation, the energy and chemicals unit of South Korea’s third-largest conglomerate, SK Group, was a relative latecomer to the electric-car battery industry, embracing the technology only as part of a diversification push. It began developing lithium-ion batteries for hybrid electric vehicles in 2005 and spun off the unit in April 2019. Battery separators improve the output and stability of batteries.
SK IE Technology’s IPO was managed by Mirae Asset and JPMorgan Chase & Co., assisted by Korea Investment & Securities Co. and Credit Suisse Group AG.
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