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May 4, 2018

Volume 7 Issue 3

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SK Nixed IPO Plan Again

SK Lubricants said last week that it was tabling a planned initial public offering for the third time after once again failing to achieve a desired valuation for the business.

Parent company SK Innovation planned to offer shares worth a combined 30 percent stake in the business to secure 1 trillion to 1.2 trillion won (U.S. $929 million to 1.1 billion). SK filed its IPO application in February and in April kicked off a public offering process that would have culminated in its base oil and lubricants subsidiary being listed on the Korea Stock Exchange this month.

"In terms of investor protection, there's no issue as no shares were allocated to institutional investors, and no offer was made to retail investors yet," the company noted in an April 27 filing with the exchange.

"SK suggested the initial offering price come between 101,000 won and 122,000 won per share, but institutional investors offered lower than the price," said Hwang Gyuwon, analyst of Yuanta Securities Co. "This IPO withdraw seems to be a halt rather than postponement."

Prior to a two-day demand forecasting session held on April 25 and 26, Heungkuk Securities Co. said the suggested the offering price seemed to be too high and asserted that the financial market was uncertain about the potential for base oil demand growth.

"SK Lubricants will continue to carry out its global projects to ensure stronger competitiveness and market presence as market leader," the company said in a separate written statement.

SK Lubricants tabled previous IPO plans in 2012 and 2015, in both cases citing unfavorable market climates. In 2015, SK Lubricants reportedly discussed the possibility of selling a stake of the company to South Korean private equity firm MBK Partners.

SK Lubricants is the world’s leading supplier of API Group III base stocks and is the leading lubricant supplier in Korea, according to the company.  SK Innovation, which is part of the Seoul-based conglomerate SK Group, also has operations in oil and petrochemical refining and fuel sales.