Sono International, the holding company of Daemyung Sono Group, has secured up to 500 billion won ($346 million) in pre-IPO investment by issuing exchangeable bonds (EBs) asset-backed short-term bonds. The company plans to go public as early as the second half of this year, using proceeds from the initial public offering (IPO) to fully repay the 500 billion won investment.
Sono International has decided to raise up to 300 billion won by issuing exchangeable bonds with Woori Investment & Securities and up to 200 billion won in asset-backed short-term bonds with DB Financial Investment, according to sources in the investment banking sector on Feb. 5. The two securities firms are expected to finalize the decision at their investment review committee meetings later this month.
This investment is structured as a pre-IPO deal. Sono International will issue exchangeable bonds and sell them to securities firms. If the IPO price is lower than the exchange price, the company will redeem the bonds in cash. Otherwise, the bonds will be converted into treasury shares. If investors choose to convert bonds into equity, Sono International’s capital base will increase.
Asset-backed short-term bonds are debt instruments used to raise short-term capital with maturities of less than one year. They have shorter maturities than asset-backed commercial paper (ABCP). For Sono International, this investment serves as a bridge loan, allowing the company to secure funds upfront from securities firms and repay the investment using the proceeds from the IPO.
Analysts compare Sono International to Mona YongPyong, which has a price-to-book ratio (PBR) of just 0.4 to 0.5 times, If the same metric were applied to Sono International, its valuation would be under 300 billion won. Compared to Ananti, which has a PBR of 0.8 times, its estimated market capitalization would be only around 400 billion won.
However, some analysts believe that Sono International’s IPO valuation could reach the trillion-won range, with some estimates reaching as high as 3 trillion won. If the company is valued at 3 trillion won, raising 500 billion won should not be an issue. Sono International is reportedly confident that its IPO will bring in well over 500 billion won.
“Considering the value of the airlines owned by the group, the company can secure a higher valuation,” said an industry insider.
