SK Holdings Co. is in negotiations with several private equity firms to sell up to a 49% stake in a special purpose company (SPC) set up to
invest $1.6 billion in the US hydrogen fuel cell maker Plug Power Inc., according to investment banking sources on Mar. 9.
In February of this year, the holding company of the SK Group acquired a 9.9% stake in Plug Power via the SPC, Grove Energy Capital. It is a 50:50 joint venture between two units of SK Holdings and SK E&S Co., the country's largest city gas supplier. The two SK units each pumped $800 million into the SPC.
Based on Plug Power’s market value of $19 billion, a 49% stake in the SPC is estimated at around 1 trillion won ($880 million). Shortly after SK's investment, Plug Power's share price more than doubled to $65 from $29, pushing its market capitalization to $30 trillion at one point. Now it is trading at $38.
Along with the stake purchase, SK Group agreed with the US energy company to
set up a joint venture in Korea within the year, to mass produce fuel cells and conduct water electrolysis by 2023. The power plant to be built will likely be similar to Plug Power's 1.5 GW-a-year fuel cell production plant currently under construction in New York State.
A prospective investor in the SPC is likely to call for downside protection such as SK Group buying back the financial investor's shares in the SPC at a specified price later on, or allowing the FI to exercise a drag-along option to exit.
An SK Holdings official told Market Insight that the company is "considering cashing out of some of investment in the SPC, but nothing has been determined.” Market Insight is the capital news outlet of The Korea Economic Daily.
The stake deal, if completed, will become the latest in SK Group's string of divestments to secure new funding for growth areas.
Write to Jun-ho Cha at
chacha@hankyung.comYeonhee Kim edited this article.
