이 기사는 2022년 03월 23일 08시15분 thebell에 표출된 기사입니다

SK ecoplant, part of South Korea’s SK Group, has started a process of an initial public offering (IPO) slated for the second half of 2023, with attention being paid to its IPO valuation.

SK ecoplant sent requests for proposal to major stock brokerage firms at home and overseas on Monday, starting the IPO process one year after it changed its name and announced its IPO plan in May 2021.

After receiving proposals from securities firms over the next two weeks, SK ecoplant will choose its underwriting syndicate in April and discuss its IPO plan.

Attention is being paid to brokerage firms’ estimate of the company’s value in their proposals. In May 2021, then the company’s chief executive Ahn Jae-hyun announced a plan for the IPO in the next two years, saying that SK ecoplant “will achieve continued growth and increase shareholder value by going public and will grow to become Asia's leading environmental company by 2023”. He added that the company is aiming for a valuation of as much as 10 trillion won ($8.2 billion).

The valuation of 10 trillion won is around 12 times expected earnings before interest, taxes, depreciation and amortization (EBITDA) of 850 billion won for 2023.

Industry insiders expect SK ecoplant to have recorded 300 billion-400 billion won in EBITDA in 2021. To achieve EBITDA of 850 billion won in 2023, the company will have to focus on its new growth engines including eco-friendly bolt-on strategy, environmental management solution (EMC), hydrogen and fuel cell businesses.

IPO valution expected to be over 10 trillion won

SK ecoplant’s stock is traded at between 78,000 won and 80,000 won on the country’s over-the-counter (OTC) market. SK ecoplant’s market capitalization comes to 2.75 trillion won-2.83 trillion won, calculated by multiplying its stock price by the total number of issued stocks of some 35.29 million shares. Its market capitalization is about one-third of its target IPO valuation of 10 trillion won.

Financial investors including Premier Partners that will participate in SK ecoplant’s pre-IPO funding expect the IPO valuation to be more than two times its current market capitalization. Some market insiders estimate its post-money valuation to be about 8 trillion won.

The financial investors are attracted to the fact that SK ecoplant has transformed itself into an environmental management services provider over the recent years. The company’s improved financial soundness after securing 450 billion won in cash through a sale of a 50% stake in SK ecoengineering also appealed to the investors.

An IPO valuation is normally two times higher than a pre-IPO valuation. If SK ecoplant is valued at 8 trillion won in its pre-IPO funding, the company will smoothly get a valuation of 10 trillion won in its planned IPO in the second half of next year.

Brokerage firms that received invitations plan to prepare for their proposals based on the results of the pre-IPO funding.

Competition is expected to be fierce to win a plum role in the lucrative deal led by SK ecoplant whose valuation is worth multi-trillion won. Some market insiders said there would be many securities firms that estimate the valuation to be over 10 trillion won in their proposals to take a role.

“The corporate valuation of 10 trillion won seems a bit high given the company’s current financial performance and business conditions,” an industry source said, adding, “Yet, there is plenty of room to challenge itself as SK ecoplant has built its equity story, focused on eco business, in recent years.” (Reporting by Chul Kang)