This article was published on July 16, 2025, at 4:54 p.m. on the ChosunBiz MoneyMove site.
SK Innovation selected MERITZ Securities as the preferred negotiation partner for its 5 trillion won liquefied natural gas (LNG) asset liquefaction project. MERITZ caught attention as a 'catfish' by entering the competition later than rival private equity fund (PEF) managers Kohlberg Kravis Roberts (KKR) and Brookfield Asset Management but ultimately became the main player in the deal.
The market had speculated that MERITZ gained a competitive edge by offering lower interest rates than its rivals; however, it was found that the rates proposed by the private equity funds were actually lower. Industry insiders assess that the key factor for MERITZ securing this deal was the negotiation power of adviser Jeong Yeong-chae. Jeong, noted as a 'lend' in the securities industry, is also serving as an outside director at SK Gas, a subsidiary of SK Innovation, and has been recognized for building mutual trust with the SK Group through this experience.
On the 16th, according to the investment banking (IB) industry, SK Innovation notified MERITZ Securities that it had been selected as the preferred partner for the LNG asset liquefaction project. This liquefaction is reportedly being fully supported by its holding company, SK Inc., and is part of a broader restructuring effort overseen by Chairperson Choi Chang-won of the SK SUPEX Council.
SK Innovation's LNG asset liquefaction aims to raise cash based on four private power plants, including Gwangyang, Yeoju, Hanam, and Wirye. Previously, it was reported that MERITZ Securities, KKR, and Brookfield Asset Management participated in the preliminary bidding on the 10th. There have been rumors that Brookfield withdrew, but it is said that Brookfield publicly maintains that it participated in the bidding.
A notable point in the industry was the investment conditions, including the interest rates offered by MERITZ Securities and the private equity funds. Evaluations emerged that MERITZ gained the upper hand by offering an interest rate in the 6% range. In contrast, it was revealed that KKR and Brookfield demanded interest rates of at least 8%.
However, it turned out that there was not much difference in the interest rate conditions between the two companies. KKR proposed a structure to acquire 5 trillion won worth of redeemable convertible preferred shares (RCPS) issued by the SK Innovation's power subsidiaries, with an interest rate reportedly in the mid-6% range.
It is reported that MERITZ Securities proposed to acquire 3 trillion won worth of convertible preferred shares (CPS) at an interest rate in the late 6% range. This is slightly higher than the rate proposed by KKR. The remaining 2 trillion won is planned to be directly supported to SK On through a price return swap (PRS). Since the primary goal of this liquefaction was to support SK On, it is interpreted as an intention to alleviate SK's concerns by directly providing funds to SK On.
The industry assesses that the reason MERITZ Securities was able to secure this deal under relatively unfavorable interest rate conditions was significantly influenced by adviser Jeong Yeong-chae. Jeong, who previously served as president of NH Investment & Securities, is known to have led this liquefaction deal. MERITZ Securities, long strong in high-interest acquisition financing, took the lead to show externally that it can also perform well as a 'traditional IB.'
Adviser Jeong has also been working as an outside director of SK Gas, an affiliate of SK Group, since last March. He also serves as chairperson of the audit committee. SK Gas's largest shareholder is SK discovery, and the largest shareholder of SK discovery is Chairperson Choi Chang-won, who holds 42% equity. Therefore, the industry evaluation suggests that Jeong must have a greater understanding of the SK Group's restructuring and business reorganization led by Chairperson Choi than competitors.
As it has been selected as the preferred partner, MERITZ Securities is expected to complete the due diligence and coordinate terms through negotiations with SK Inc. and SK Innovation. MERITZ Securities reportedly participated in the preliminary bidding without completing the due diligence due to its late entry into the deal.