SK Corp. will launch a renewable energy joint venture (JV) with global private equity fund manager Kohlberg Kravis Roberts (KKR) at the end of this year. The move is aimed at integrating renewable energy businesses that have been scattered across SK affiliates and combining strategic investment capital.
On the 1st, SK Corp. said it signed an equity investment agreement with a fund managed by KKR for a renewable energy integrated company. SK Innovation, SK ecoplant, and SK discovery are currently proceeding with procedures to sell each company's renewable energy business asset to KKR through business and equity transfers. Based on this, the integrated company, tentatively named "HoldCo," is slated to officially launch at the end of this year.
KKR will hold 51% equity in the integrated company, and SK Corp. will hold 49%. KKR will have initial management control, but SK Corp., after participating via an equity investment, left open the possibility of securing management control through future negotiations.
The new integrated company will have a portfolio covering all non-hydrogen renewable power generation sectors, including solar, offshore and onshore wind, fuel cells, and energy storage systems (ESS). The integrated company currently operates about 1.7 GW of power capacity. It plans to expand capacity to 10 GW by 2031.
Behind the launch of the integrated company is the renewable industry's characteristic large-scale capital-intensive structure. SK Corp. expects sustained large investments will be needed for capacity expansions and development of new generation sources. Because raising investment funds solely through affiliate-level borrowing or capital increases would inevitably heighten financial burdens, the company judged that co-investment with strategic capital is a more realistic and efficient alternative.
KKR is an investor with world-class capabilities and capital strength in renewable energy. KKR manages more than $100 billion (about 150 trillion won) in infrastructure assets and has invested about $31 billion (about 47.7 trillion won) in renewable energy infrastructure since 2011.
Kim Yang-han, KKR head of infrastructure for Northeast Asia, said, "Korea is considered one of the most attractive renewable markets in Asia, with robust corporate demand for clean power across semiconductors, data centers, and manufacturing," adding, "Through this partnership, the two companies will build a large-scale renewable platform that can reliably meet the high power demand of domestic industry."
An SK Corp. official said, "This integration of renewable energy operations is part of a preemptive portfolio rebalancing to enhance the business's sustainability and competitiveness," adding, "By combining KKR's capital strength with SK's execution, we will respond to surging clean energy demand and build a long-term sustainable growth model."