This article was published on June 26, 2025, at 2:33 p.m. on the ChosunBiz MoneyMove site.
SK On is in discussions to secure 200 billion won in funding from MERITZ Securities. MERITZ Securities proposed to provide the funds through a total return swap (TRS) method, but SK On is said to prefer a different method.
MERITZ Securities is also trying to secure a 5 trillion won liquefied natural gas (LNG) securitization deal for its parent company, SK Innovation. It is emerging as a support force for the group by engaging in investment negotiations with SK Innovation's affiliates one after another.
According to the investment banking (IB) industry on the 26th, MERITZ Securities proposed to support SK On with around 100 billion won through the TRS method, and negotiations on the terms and methods are ongoing. The fundraising amount is reported to be likely around 200 billion won.
A total return swap refers to a transaction where the return from owning an underlying asset, such as interest or capital gains, is exchanged for an agreed-upon interest payment. The securities company buys or holds assets on behalf of SK On, and any revenue (or loss) generated from the assets goes to SK On, while SK On pays the agreed interest income to the securities company. Essentially, the securities company lends to SK On using the assets as collateral.
The purpose of this capital acquisition is reportedly to repay some financial investors (FIs) of SK On or to alleviate liquidity constraints. SK On has received approximately 5 trillion won in investments from 2022 to last year. The MBK Partners consortium invested about 1.5 trillion won, Korea Investment Private Equity and Eastbridge contributed 1.2 trillion won, and Saudi Arabia's state-owned SNB Capital invested 190 billion won.
MERITZ Securities is currently also pursuing the LNG securitization deal for SK Innovation, the parent company of SK On. SK Innovation's LNG securitization is focused on raising cash based on infrastructure assets such as five private power plants located in Gwangyang, Paju, Yeoju, Hanam, and Wirye, as well as LNG terminals. The company aims to secure up to 5 trillion won by securitizing these assets.
MERITZ Securities is known to be the most proactive among securities firms in entering negotiations. However, it is reported that the TRS method was not proposed for the LNG securitization deal. The market speculates that instead, MERITZ Securities has likely proposed redeemable convertible preferred shares (RCPS) or price return swaps (PRS) to SK.
An IB industry insider said, "MERITZ Financial Group is demonstrating that it can handle 'traditional IB' by consecutively pursuing the deals of SK Innovation, which is in a difficult situation."