SK might sell assets in Vietnam and Malaysia to raise billions of dollars.
SK Group (034730.KS), the second-largest conglomerate in South Korea, announced on Monday that it is contemplating selling some of its holdings in Southeast Asia and reinvesting in other businesses in Vietnam and other nations in the area.
Reuter said that while continuing investing in vital industries, SK Group wants to raise cash through asset sales in preparation for an economic slowdown.
People acquainted with the situation stated on Sunday that SK Group is considering selling some of its assets in Vietnam and Malaysia controlled by its investment vehicle SK South East Asia Investment Pte. Ltd. to prepare for deteriorating economic conditions, as reported by the news source.
The potential asset sales occur at a time when Korea’s major corporations are stockpiling cash and avoiding ambitious expenditures in new projects due to a bleak prognosis for the next year.
SK South East Asia Investment holds a 6.1% stake in Vietnam’s largest conglomerate Vingroup JSC, a 9.5% stake in Vietnam’s No. 2 conglomerate Masan Group, a 14.5% stake in retail chain Pharmacity, a 54% stake in pharmaceutical company Imexpharm Corp., a 16.3% stake in retailer VinCommerce, a 4.9% stake in The CrownX Corp., and an undisclosed stake in Malaysia’s AirAsia Group Bhd’s fintech
A SK representative stated that no definitive decisions had yet been taken. Details such as the firms involved and the quantity of the available stakes would be established later, he added.
PREEMPTIVE MOVE
“SK is not experiencing a financial bind. According to a source in the investment banking business, the company only wants to acquire cash in advance to prepare for worsening economic conditions.
Since its inception in 2018, Singapore-based SK South East Asia Investment has led the group’s investment efforts in several Southeast Asian industry sectors.
SK Inc., SK E&S Co., SK Hynix Inc., SK Telecom Co., and SK Innovation Co. have each contributed $200 million to the investment vehicle, for a total paid-in capital of $1 billion.
SK South East Asia Investment, in conjunction with Korea’s state pension fund National Pension Service, has invested up to 3 trillion won ($2.34 billion) to acquire shares in seven Vietnamese and Malaysian enterprises.
Last month, during a corporate meeting, SK Group Chairman Chey Tae-won stated that survival now takes precedence above earnings and managerial efficiency, advising chief executives of group affiliates to stockpile cash in case of an emergency.
SK Inc., the parent company of SK Group, increased its outstanding net borrowing to 10.87 trillion won at the end of the third quarter, up from 6.88 trillion won at the end of 2018.
Mid-December, SK On Co., a battery manufacturer, issued redeemable preferred shares (RPS) to Korea Investment Private Equity and other private equity companies as part of a groupwide attempt to acquire funding (PEFs).
SK E&S raised 1.38 trillion won through the sale of its headquarters and the issuance of redeemable convertible preferred shares (RCPS) in the amount of 735 billion won for Busan City Gas Co.
According to reports, SK Group has obtained up to 4 trillion won in emergency reserves so far this year.
However, the business is believed to be investing extensively in growth engines of the future, including semiconductors, raw materials, and artificial intelligence.
According to insiders, a portion of the earnings from the sale of holdings in the Vietnamese and Malaysian enterprises might be reinvested in potential Southeast Asian companies.
