SK Bioscience set to make $1.3 bn blockbuster market debut in mid-March

[Photo provided by SK Bioscience Co.]

SK Bioscience Co. is set to revive furor in South Korea’s initial public offering (IPO) market with its upcoming blockbuster IPO of over $1 billion next month, given its unrivaled position in vaccine development and production at home and bold investment plans to explore other areas beyond vaccines.

According to its IPO plans released on Tuesday, SK Bioscience, a spin-off from SK Chemicals that develops and distributes flu, herpes zoster and chickenpox vaccines, confirmed that it will sell total 22.95 million shares, of which 15.3 million shares are new shares, in the public offering. The desired IPO price is set at a band between 49,000 won ($44.06) and 65,000 won per share, which could fetch 1.49 trillion won at the top end.

The company with an estimated enterprise value of at least 6 trillion won is an unparalleled vaccine developer and producer in Korea. It is now in the spotlight for its ongoing development of Covid-19 vaccines with its two vaccine candidates NBP2001 and GBP510 under clinical trials.

SK Bioscience also signed a contract to produce Covid-19 vaccine stocks and finished vaccines for AstraZeneca. Under a contract with Novavax, the company is developing, producing, and distributing antigens for a coronavirus vaccine candidate. It has also received proposals from other global pharmaceutical companies for business partnership, said the company’s chief executive Ahn Jae-yong.

With the proceeds from the upcoming IPO, the Korean vaccine developer will invest about 400 billion won in capex expansion, 100 billion won in development of platform technology, up to 100 billion won in glocalization and up to 200 billion won in development of next-generation pneumococcal vaccine, said Ahn.

“We will strive to become a global contract manufacturing organization (CMO) that can produce not only vaccines but also other medications like anticancer drugs,” said Ahn.

The company earned 22.8 billion won in operating profit over sales of 182.9 billion won in 2019. Sales had grown at a CAGR of 23.4 percent for three years since 2017. For the three quarters of last year, sales and operating profit amounted to 158.6 billion won and 26.8 billion won, respectively.

Book building to determine the IPO price of SK Bioscience will take place on Mar. 4-5, and public subscriptions are due on Mar. 9-10 before listing on the Kospi market in mid-March.

Once it makes a market debut, it is expected to avoid immediate hefty selloffs thanks to a lockup on more than 70 percent of its outstanding shares. Its biggest shareholder SK Chemicals is banned to sell its 68.43 percent stake within six months after the IPO, while 6 percent shares held by its employee stockholders association have a lockup period of one year.

NH Investment & Securities is the lead manager for the listing, and Korea Investment & Securities and Mirae Asset Daewoo co-managers.

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