SK E&S to sell Ko-one Energy Service headquarters building

Ko-one Energy Service, a city gas subsidiary of SK E&S, located in Daechi-dong, Gangnam-gu, Seoul. (SK E&S)

SK E&S Co., an energy arm of South Korea’s SK Group, is planning to sell the headquarters building of its subsidiary Ko-one Energy Service Co.

The move is seen as part of an effort to secure funds for its merger with SK innovation Co.

According to sources from the conglomerate circle on Thursday, SK E&S is seeking to sell the 50,000-square-meter headquarters site in Daechi-dong, southern Seoul.

According to artificial intelligence (AI) real estate valuation service Value of Space Inc., the land is estimated to be worth between 450 billion won ($337 million) and 500 billion won.

The Seoul Metropolitan Government announced last year that it plans to develop the area, including the adjacent Seoul Trade Exhibition Center site, into a New International Cultural Complex District. No actual development has taken place yet, however.

SK E&S plans to finalize the sale by the end of 2024. Gangnam Severance Hospital is currently considered the most likely buyer.

“Severance Hospital is one of the potential buyers, and we are currently in discussion,” said an SK E&S official. “The hospital’s public role and its contributions to improving the local healthcare environment in Gangnam are key factors in our talks.”

Ko-one Energy Service, one of seven city gas subsidiaries owned by SK E&S, supplies gas to key areas in the Seoul metropolitan area, such as Gangnam, Songpa, parts of Seocho District, and cities in Gyeonggi Province, including Gwacheon, Seongnam, and Hanam.

Originally founded as Daehan City Gas Co. in 1978, it was renamed Ko-one Energy Service in 2011 and is fully owned by SK E&S.

SK E&S recently established an intermediate holding company called E&S City Gas, through which it made in-kind investments in six city gas subsidiaries, including Ko-one Energy Service.

Industry insiders view this asset sale as part of SK E&S’s rebalancing of its business portfolio following its decision to merge with SK innovation.

As each SK affiliate is currently selling various subsidiaries and business units to raise cash, SK E&S is also trying to secure large-scale liquidity.

However, some industry insiders interpret the sale of the core assets of a city gas subsidiary as a potential signal that SK E&S is winding down its city gas business.

SK E&S is still under a conditional agreement with private equity firm Kohlberg Kravis Roberts (KKR) & Co. to hand over the city gas business in kind if it fails to resolve the issue of 3.14 trillion won in redeemable convertible preference shares (RPCS) issued to the private equity firm.