Korea Investment Private Equity (Korea Investment PE) has realized a large profit from its investment in SKC (011790.KS) perpetual exchangeable bonds (EB) in about one year.
According to the investment banking (IB) industry Wednesday, Korea Investment PE converted all of its SKC EBs, held through funds including the "Korea Investment 2024-1 Fund," into common shares, and recently sold the entire stake through after-hours block deals and open-market trading. The funds recovered from the stake sale are estimated to reach 370 billion won.
In June last year, Korea Investment PE invested a total of 250 billion won in the 260 billion won, 30-year perpetual EB issued by SKC. The remaining 10 billion won was acquired by Helios PE, another domestic private equity fund (PEF) manager. At the time, SKC set the exchange target of the EB as treasury shares held by the company, with an exchange price of 103,842 won per share.
Korea Investment PE's faster-than-expected move to realize profits is attributed to the steep rise in SKC's share price this year. SKC succeeded in turning its earnings before interest, taxes, depreciation and amortization (EBITDA) positive in the first quarter of this year, while raising expectations that its new glass substrate business—a key material in next-generation semiconductor packaging—would gain full momentum, stimulating market investor sentiment. Boosted by this, SKC's share price, which had been hovering around 100,000 won, surged to as high as the 170,000 won range this year.
Korea Investment PE appears to have sequentially unwound its stake at the 120,000 to 160,000 won level in consideration of this share price rise. As a result, it secured a profit of about 120 billion won against its principal investment, achieving a jackpot exceeding 50 percent on an annualized internal rate of return (IRR) basis.
Securities analysts also offer positive forecasts for SKC's future earnings. Shinyoung Securities recently raised its target price for SKC to 130,000 won from 97,000 won. Park Jin-soo, an analyst at Shinyoung Securities, said, "The secondary battery materials division is expected to see full-fledged earnings improvement starting in 2027, when the restructuring of the domestic Jeongeup plant and the transfer of production volume to the Malaysia line are completed."
