SK Innovation's No.2 shareholder NPS to vote nay on battery spinoff plan

National Pension Service (NPS), the second largest shareholder of SK Innovation Co., plans to vote nay on the company’s plan to carve out its battery business into a wholly-owned subsidiary at Thursday’s ad hoc shareholders’ meeting, but the public fund’s opposition won’t likely deter the demerger scheme for next month.

NPS, also the world's third largest pension fund, said on Tuesday that it will vote against SK Innovation’s plan to break up the company into an energy flagship and battery pure player.

The state’s pension fund owns 8.05 stake of SK Innovation as of end-June.

“We understand the cause and purpose of the spinoff but we have concluded that the move can dilute shareholder value,” NPS explained in a statement.

NPS’s opposition won’t likely derail the scheme as most other institutional investors are in favor of the move. In October last year, the pension fund also voted against LG Chem’s demerger of its battery operation but the plan got the backing of majority of shareholders.

SK Innovation announced the separation plan in August to bolster the competitiveness of its business by establishing a separate management system for each business unit.

The new entities, tentatively named SK Battery and SK E&P, are slated to officially launch on Oct. 1, following a final approval at a shareholders’ meeting set for Thursday.

The envisioned SK Battery will concentrate on mid- and large-size electric vehicle batteries, Battery as a Service (BaaS), and energy storage systems businesses. The company said it is planning to list the battery unit as early as next year to secure funding to build battery plants at home and abroad.

SK E&P will be in charge of oil exploration and production and carbon capture and storage business, while SK Innovation will serve as their holding company, focusing on discovering new businesses like battery recycling business (BMR) through eco-friendly research & development and mergers and acquisitions.

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