SK On CI.

This article was posted on June 27, 2025, at 5:42 p.m. on the ChosunBiz MoneyMove site.

As Meritz Securities suddenly emerged in the 5 trillion won liquefied natural gas (LNG) liquefaction deal of SK Innovation, there are reports that Meritz has also proposed trillions of won in funding to SK On, a subsidiary of SK Innovation.

With Meritz Securities rising as a 'catfish' with strong financial power, various interpretations are emerging in the industry. Meritz Securities typically takes on all the volume without syndication, leading to questions about whether they can handle trillions of won in funding for the SK Innovation group. Given that there are no institutions other than Meritz Securities capable of investing trillions of won in companies like SK On, there are reactions indicating that such discussions are understandable.

According to multiple investment bank (IB) industry insiders on the 27th, Meritz Securities recently proposed to invest trillions of won in SK On using the price-to-earnings swap (PRS) method.

This is a separate proposal from the plan to inject 5 trillion won into the LNG liquefaction of SK On's parent company, SK Innovation. LNG liquefaction aims to secure cash based on infrastructure assets such as five private power plants and LNG terminals of SK Innovation. Preliminary bidding will take place on July 7. Initially, it was expected to be a two-way battle between global private equity firms Kohlberg Kravis Roberts (KKR) and Brookfield, but suddenly the entry of Meritz Securities has turned it into a three-way battle.

The PRS investment reportedly proposed by Meritz Securities to SK On is secured against the assets of its parent company, SK Innovation, and the holding company SK Inc. Currently, SK Inc. holds a 55.9% stake in SK Innovation, while SK Innovation holds an 87% stake in SK On. This establishes a governance structure of 'SK Inc. → SK Innovation → SK On.'

An IB industry insider noted, 'SK On lacks assets that could be put up as collateral,' adding, 'In essence, it is a structure where funds are injected into SK On relying on the credit of SK Innovation and holding company SK Inc.'

As Meritz Securities continues to be named in the trillion won deal of SK Innovation, various reactions have emerged in the industry.

An IB industry insider stated, 'Meritz typically does not conduct syndication and absorbs volume alone,' adding, 'Given that tendency, a 5 trillion won (LNG liquefaction deal) is an extraordinarily large amount.'

There are also assessments that the interest rate of over 6% reportedly proposed by Meritz Securities to SK Innovation is unusual. Previously, Meritz Securities had a strong image of being 'the institution corporations turn to as a last resort' due to its higher rates compared to other securities firms. For the Homeplus acquisition financing, the interest rate also approached 8-14%.

According to industry sources, Jeong Young-chae, a senior advisor at Meritz Securities (former president of NH Investment & Securities), is reportedly significantly involved in this SK Innovation deal. Since bringing in adviser Jeong, Meritz Securities has focused on strengthening its core investment banking sector.

Some analysts suggest that if not Meritz Securities, there would be no institution willing to bet trillions of won on SK On. It is known that about 65% of SK Innovation’s consolidated net debt of 31 trillion won is attributed to SK On, amounting to 20 trillion won.

☞Syndication

It is when financial companies organize a syndicate to reduce the burden or risk of financing and lend to the borrower under common conditions.