This article was published on June 4, 2025, at 4:58 p.m. on the ChosunBiz MoneyMove site.
SK Innovation is pursuing a deal to liquefy natural gas (LNG) power plants and the entire value chain, with global private equity firms and major domestic asset managers reportedly considering participation.
Although SK Innovation has stated that this matter has not yet been reported to the board and that nothing has been decided, it is anticipated that the scale of the transaction could reach between 3 trillion to 4 trillion won if it solidifies.
According to investment banking (IB) industry sources on the 4th, firms such as Kohlberg Kravis Roberts & Co. (KKR) infrastructure sector, Brookfield, and IMM Investment are considering participation in the LNG asset liquefaction deal being pursued by SK Innovation.
The liquefaction of LNG by SK Innovation is based on raising cash through private power plants including Gwangyang, Paju, Yeoju, Hanam, and Wirye power stations, among other infrastructure assets. However, the extent of the asset included in the liquefaction target has yet to be determined.
The transaction scale is expected to be at the level of 3 trillion to 4 trillion won, assuming that all five private power plants and terminals are liquefied. Initially, there were expectations that it could reach up to 5 trillion won in the market, but the industry consensus is that this is realistically difficult.
While there is discussion in the market about the possibility of SK Innovation outright selling its LNG-related assets, it has been reported that the company is effectively excluding the sale option.
An industry source said, “Since President Lee Jae-myung has expressed the intention to utilize LNG as a transitional fuel for the shift to renewable energy as a replacement for coal power, the likelihood of SK Innovation selling its core asset, the LNG power plant, is very low.”
There could be several methods for liquefying LNG power plants and the value chain. First, cash could be raised by incorporating the entire LNG value chain and selling a minority stake.
However, in this case, it is realistically expected to be challenging to go public (IPO) for financial investors (FIs) acquiring minority stakes to achieve exit (capital recovery) since SK Innovation is already listed, which could spark duplicate listings controversy.
Additionally, options are expected to include issuing bonds based on projected revenue, obtaining loans, or issuing asset-backed securities (ABS) secured by future cash flows.