Brain Asset Management named preferred bidder for SK pharmteco’s pre-IPO

SK Pharmteco headquarters in California, U.S. [Courtesy of SK Pharmteco]

SK pharmteco, a contract development and manufacturing organization specializing in the production of active pharmaceutical ingredients, has selected Brain Asset Management Co. as the preferred bidder for its pre-initial public offering (IPO).

According to sources from the investment bank industry on Tuesday, SK pharmteco under SK Group and Brain Asset Management evaluated SK pharmteco’s corporate value at 5 trillion won ($3.95 billion). Brain Asset Management is reportedly expected to invest $500 million in the company for about 10 percent stake.

Brain Asset Management is known to have promoted a 300 billion won blind fund that focuses on new overseas companies with expertise in the areas of advanced technologies for the deal. Part of the funds for the pre-IPO will be raised via the blind fund, while the remaining amount will be raised through project funds.

SK pharmteco has attracted investors by guaranteeing an internal rate of return (IRR) of about 6 percent, which is lower than the 7.5 percent IRR for the investors of SK on Co.

This indicates that the investment in SK pharmteco is considered a promising investment option. The company’s performance has been on an upward trend, with sales increasing by 17 percent to 907 billion won last year from a year before, and operating profit up to 49 billion won from 29 billion won during the same period.

The company is also accelerating moves to expand to global markets, securing production facilities in Europe and the U.S. over the past few years.

In 2021, it acquired a French CDMO Yposkesi. In 2022, it became the second-largest shareholder of the U.S. CDMO, Center for Breakthrough Medicines (CBM).

During the preliminary bidding led by Credit Suisse AG in May, SK pharmteco attracted multiple participants, including IMM Private Equity Inc., STIC Investments Co., Stonebridge Capital Inc., Corstone Asia Co., and Brain Asset Management.