Korean Economy News
SK Lubricants on track for $1.4 bn mega-IPO in mid-May

By Kang Doo-soon and Cho Jeehyun

SK Lubricants Co., wholly-owned by South Korea’s leading oil refiner SK Innovation Co. will go public in mid-May via an offering of 30 percent in equity stake, delivering the first blockbuster Korean IPO of up to 1.5 trillion won ($1.4 billion).

The company, ranked the world’s top in high-quality Group III lubricant category, said it filed a scheme for an IPO in mid-May. Under the plan, it will offer total 12,765,957 issues or around 30 percent of total 40 million outstanding shares. SK Lubricants will issue 2,553,191 in new shares, while its parent SK Innovation will put up 10,212,766 in existing shares. The IPO is set at a price band of 101,000 won-122,000 won apiece, which could bring the company fresh capital of up to 1.5 trillion won at the top end. The company will later disclose details on book-building for IPO pricing and public offering schedule.

SK Lubricants produces and exports Group III base oils, which go into high-quality lubricant products, to more than 50 countries across the world. It holds a dominant market share of 39.3 percent.

According to commodities researcher ICIS, global Group III base oil market is expected to grow at 3.4 percent on average annually as global lubricant makers are continuing to switch from Group I base oil to higher quality Group II and Group III base oils under global shift for cleaner fuel.

SK Lubricants has manufacturing ventures with a number of global lubricants makers including Indonesia`s state oil company PT Pertamina and Japan`s JX Nippon Oil & Energy, allowing it to command a combined annual capacity of 3.5 million tons of base oils.

The company posted 504.9 billion won in operating profit for full 2017 and its operating margin has averaged 13.5 percent over the last three years.

Previously in 2013 and 2015, SK Innovation reviewed the lubricant maker’s IPO but nixed the plan due to the slump in the global oil industry.

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