SK Group is in deep negotiations with Hahn&Company, a leading private equity firm in South Korea, regarding the sale of its operating rights in silicon wafer manufacturer SK Silvron. This potential transaction involves the sale of a total of 70.6% of the shares, of which 51% are directly held by SK Group and the remaining 19.6% are held through Total Revenue Swap (TRS) contracts. If finalized, this will be Hahn&Company's tenth successful acquisition of SK Group assets.
SK Sillron is the only semiconductor silicon wafer manufacturer in South Korea, playing a crucial role in the semiconductor value chain. Its market share ranks third globally, only behind Sumco and Shinetsu from Japan. Since SK Group acquired 51% of LG's shares for 620 billion Korean won (approximately 427 million US dollars) in 2017, SK Sillon has achieved significant growth, with its revenue increasing from 933.1 billion Korean won in 2017 to 212.68 trillion Korean won in 2024, more than doubling; The earnings before interest, tax, depreciation, and amortization (EBITDA) also increased from KRW 240.9 billion in 2017 to KRW 640 billion in 2024, with an expected growth rate of KRW 640 billion.
The strategic importance of SK Siltron in the semiconductor industry makes it unlikely to be sold to foreign companies due to government security reviews.
Hahn&Company has been actively investing in SK Group's affiliated companies and has acquired shares in 9 out of the 17 investment portfolio companies previously owned by SK Group. The company established its fourth blind investment fund in July 2024, with a scale of 4.7 trillion Korean won, and acquired 85% of SK Specialty Electronic Special Gas Company's shares for approximately 2.7 billion US dollars at the end of 2024.
The potential sale of SK Siltron is expected to have a significant financial impact on SK Group. The successful sale of the company can reduce SK Group's debt ratio from the current 86% to around 50%, which will enhance SK Group's financial health and flexibility.
Based on typical EBITDA multiples of large manufacturing companies, SK Siltron's expected valuation is approximately KRW 5 trillion. Therefore, if the sale is successful, SK Group can earn a profit of 3 trillion Korean won (approximately RMB 15.1 billion) from this sale, and at least 2 trillion Korean won after repaying the debt and capital gains tax obligations under the TRS contract.
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