This article was published on May 21, 2025, at 3:54 p.m. on the ChosunBiz MoneyMove site.
Domestic private equity fund operator SG PE is pushing for a 350 billion won investment in the COSMO Group. The company is considering not only acquiring convertible bonds from COSMO AM&T, a manufacturer of secondary battery cathode materials, but also injecting funds into its holding company, COSMO & Company.
According to investment banking industry sources on the 21st, SG PE is negotiating for the investment in the COSMO Group. As it is in the early stages, the investment size and structure have not been finalized. SG PE plans to secure 50 billion won using an existing blind fund and to raise another 150 billion won each through a project fund and acquisition finance.
Of the 350 billion won, 150 billion won will go to the holding company, COSMO & Company. COSMO & Company plans to use this money for the repayment of short-term borrowings and for working capital. As of the end of last year, COSMO & Company had 453.3 billion won in short-term borrowings and 182.5 billion won in long-term volatile borrowings. The 200 billion won that COSMO AM&T will secure through the issuance of convertible bonds is expected to be used for operating funds.
The COSMO Group has past experience in transactions with SG PE. In 2015, Huh Kyung-soo, Chairman of the COSMO Group, sold shares of major affiliates including COSMO Chemical, which was in crisis due to deteriorating management, to a consortium of SG PE and Keston Partners. After restructuring, the company repurchased the shares sold after four years and secured management rights.
The reason the COSMO Group is seeking capital injection is due to the deterioration of performance at its subsidiary, COSMO AM&T, caused by a slowdown in the electric vehicle market. In the first quarter of this year, it recorded consolidated sales of 113.9 billion won and an operating profit of 1 billion won, down 6.7% and 80.3%, respectively, compared to the same period last year. The operating profit is significantly lower than the securities firms' average forecast of 4 billion won.
With weakened front demand, the scale of orders is also decreasing. COSMO AM&T disclosed on the 30th of last month that the scale of the NCMA (nickel, cobalt, aluminum) cathode material supply contract signed with LG CHEM last July was reduced from the existing 362.1 billion won to 250.4 billion won, a decrease of 30.8%. COSMO AM&T has supplied pre-sintered cathode materials to LG CHEM.
Compared to competitors in cathode material production, COSMO AM&T has a solid financial structure, making external funding possible without issuing new shares. As of the first quarter of this year, the debt ratio and net borrowing ratio are 33% and 42%, respectively. This is better than POSCO FUTURE M, a cathode material manufacturer that recently initiated a 1.1 trillion won capital increase, with ratios of 58% and 125%.
COSMO AM&T, integrated into the COSMO Group in 2010, is engaged in the production and sale of functional films, cathode materials for secondary batteries, toner, and toner magnetic bodies. The largest shareholder is COSMO Chemical, holding 27.19% equity. The governance structure goes from Huh Kyung-soo, Chairman of COSMO Group, to COSMO & Company, COSMO Chemical, and then COSMO AM&T.