Dongwon Systems raises $75 mn from bond sale on positive outlook for batteries

Dongwon Systems Co. logo [Courtesy of Dongwon Systems]

Dongwon Systems Co., a South Korean packaging materials manufacturer, is set to expand its secondary battery materials and components business with the proceeds from its latest fund-raising.

According to multiple sources from the investment bank industry on Thursday, Dongwon Systems has successfully issued corporate bonds worth 100 billion won ($74.7 million), an increase of 30 billion won from the originally planned amount.

The bonds were issued at an 18 basis points lower coupon rate than the average quoted by private bond rating companies.

Analysts note that the successful issuance comes on growing market interest in secondary battery materials that have emerged as the new growth engine.

Dongwon Systems, a top player in the local packaging materials market, also has a solid financial structure. Its sales reached an all-time high of 1.4 trillion won last year.

The company plans to use the proceeds to expand its secondary battery material parts business.

Dongwon Systems’ two-year bonds were issued in the form of green bonds. Korean green bonds can save interest costs by up to 300 million won on the condition that the funds raised are used for eco-friendly projects.

Dongwon Systems also plans to spend the proceeds for construction and facilities at its Asan plant in South Chungcheong Province that produces cylindrical battery cans.

Cylindrical battery cans are critical parts of secondary batteries that contain electrolytes to prevent short circuits and protect them from external environments.

Dongwon Systems is also focusing its company-wide capabilities on core secondary battery materials such as aluminum foils and cell pouches.

Aluminum foil for lithium-ion battery cathodes is a key component that acts as a passage for electrons to move in a secondary battery.

A cell pouch is a material that wraps a pouch-type battery that has a higher energy storage density than a cylindrical or prismatic battery. The company built a cell pouch production line in Gongju, South Chungcheong Province, where pilot products are being produced. It aims to commercialize the products by 2025.

“Dongwon Systems’ high earnings and the future growth potential of its secondary battery business led to the success in its book building session,” said an unnamed official from the IB industry. “This success is likely to heat up the A-rated corporate bond market.”