EcoPro BM, a South Korean battery material manufacturer, has initiated discussions with potential investors to secure 3 trillion won ($2.17 billion) in funding. The company faces a challenging investment climate due to growing pessimism about the secondary battery industry.
Investment banking sources reported on Jun. 20 that EcoPro BM aims to raise capital from the market and has approached major domestic private equity firms and securities companies. The company seeks investment through convertible bonds (CB) or redeemable convertible preference shares (RCPS) without appointing a lead manager, as it did in a similar fundraising effort last year.
The final investment amount may vary based on the outcome of a demand survey, influenced by the substantial financing size and negative industry sentiment. EcoPro BM’s short-term performance has recently declined, compounded by reduced electric vehicle (EV) support policies in key markets like the European Union (EU) and the United States, which have cast doubts on its mid to long-term earnings outlook. A brokerage firm recently downgraded the company’s price target to 150,000 won ($108.35).
In the first quarter, EcoPro BM reported an operating profit of 6.7 billion won ($4.84 million), but analysts predict a return to losses in the second quarter. The company achieved a 230% year-on-year increase in operating profit to 38.7 billion won ($274 million) in 2022, which decreased to 15.6 billion won ($113 million) last year.
An industry insider noted that EcoPro BM likely failed to meet performance conditions tied to the 44 billion won ($318 million) it raised from major private equity firms last year. The insider added that the EV industry’s evolving landscape presents a variable factor. Another expert emphasized that EcoPro BM must continue capital expenditures to meet demand and secure ongoing funding.
Last July, EcoPro BM raised 44 billion won from seven investors, including Skylake Equity Partners, IMM Investment, Woori Private Equity, Premier Partners, SKS Private Equity, IUM Private Equity, and Keystone Private Equity, among others.
