SK Nexilis started commercial production of copper foils at its Malaysia plant in 2023
SK Nexilis Co., the world’s largest copper foil maker, is in the final stage of negotiations to sell its thin film manufacturing division to Affirma Capital as part of efforts to prop up the copper foil business grappling with a slowdown in electric vehicle uptake, according to people with knowledge of the matter on Monday.
SK Nexilis, wholly owned by chemical materials maker SKC Ltd, is expected to close a deal with the Seoul-based private equity firm to shed its flexible copper-clad laminate (FCCL) business, worth around 100 billion won ($72.3 million), as early as November, the sources told Market Insight, the capital market news outlet of The Korea Economic Daily.
FCCL, commonly called a thin film, is a thin and flexible copper sheet. They are key materials for smartphone and TV displays, as well as 5th-generation telecommunication equipment.
It is one of the SK Group arm’s mainstay and profitable business. The FCCL division has raked in 50 billion-60 billion won annually with earnings before interest, tax, depreciation and amortization.
In 2023, MBK Partners acquired NexFlex, South Korea’s No. 1 FCCL maker (Courtesy of NexFlex)
The upcoming sale comes as SK Nexilis is seeking to raise fresh capital to fund overseas expansion of copper foil facilities.
It is in separate talks with private equity firms to sell new shares in itself. But they are drawing lukewarm interest amid a decrease in the EV battery demand.
(Graphics by Dongbeom Yun)
AFFIRMA CAPITAL’S CARVE OUT DEALS
Affirma Capital is betting on the FCCL market growth in line with the rising demand for high-resolution screens embedded on automobiles and refrigerators.
The buyout firm has built track records of carve-out deals for large business groups’ non-core assets and expanded them in bolt-on acquisitions.
In 2016, Affirma purchased a water management business from South Korea’s Kolon Group for 125.0 billion won and rebranded it as EMC Holdings.
After follow-on acquisitions of domestic waste management companies, it had catapulted EMC Holdings into the top position in the country’s waste treatment industry.
In 2020, it sold EMC to SK Ecoplant Co., formerly SK Engineering & Construction Co. Ltd., for 1.05 trillion won.
South Korea’s energy-to-telecom conglomerate SK Group controls hundreds of companies across four mainstay sectors – semiconductor and materials; energy and chemicals; information and communications technology; and logistics, services and bio.
After PE-funded expansion over the past few years, the country’s No. 2 conglomerate is now stepping up restructuring. In April, SK Networks Co. sold a 100% stake in SK Rent-a-Car Co. to Affinity Equity Partners for 820.0 billion won.
SK Inc., the group’s holding company, has been in talks with another homegrown buyout firm Hahn & Co. to sell specialty gas producer SK Specialty Co. for around 4.3 trillion won.
It has also kicked off the process of unloading SK IE Technology Co. and SK Enpulse Co., an electronics parts maker. It plans to combine AI semiconductor-related companies into one entity.
SK Ecoplant Co., a construction engineering and waste management company, recently jettisoned its entire stake in US-based lithium-ion battery recycling firm Ascend Elements Inc. to Seoul-based private equity house SKS Private Equity for about $98 million.
STAKE SALES
In April, resources developer SK Earthon Co. sold its entire 20% stake in Peru LNG Co. to US liquefied natural gas (LNG) company MidOcean Energy LLC for $256.5 million.
The same month, investment management firm SK Square sold its entire 2.2% stake in Korean gaming behemoth Krafton Inc. for 272.5 billion won through a block trade.
By Jong-Kwan Park, Ji-Eun Ha and Hyeon-woo Oh
pjk@hankyung.com
Yeonhee Kim edited this article.
