The price is right, EcoPro Materials CEO says ahead of IPO

EcoPro Materials CEO Kim Byung-hoon speaks about the company's initial public offering (IPO) at a press conference held in Yeouido, western Seoul, on Thursday. [ECOPRO]

EcoPro Materials’ initial public offering (IPO) pricing is justified says its CEO, despite the unfavorable market conditions for EV batteries and materials stocks.

“The market situation isn't great, but it is clear that the demand for EV battery materials will constantly grow, and EcoPro Materials will move forward with aggressive investment to expand our capacity,” said Kim Byung-hoon, CEO of EcoPro Materials at a press conference Thursday.

With a goal of going public on Kospi on Nov. 17, the EV battery materials company plans to sell 14,476,000 shares at between 36,200 won ($27) and 44,000 won each. If the upper end of the price band is hit, 637 billion won worth of stocks will be sold.

With the share price set at the upper end, its market capitalization is expected to reach 3.13 trillion.

When asked about concerns regarding the valuation issue, Kim said the “price is not that high [considering] our growth strategies.”

The raised funds will be used to build additional plants to make precursors, the raw materials used to make cathodes produced by combining materials such as nickel, cobalt and manganese. They account for 70 percent of the cost of cathodes, the material that in turn accounts for 40 percent of battery costs.

EcoPro Materials currently has two precursor plants in Pohang, North Gyeongsang, with an annual capacity standing at around 50,000 tons in total.

Its sales, which stood at 57 billion won in 2018, rose at an annual rate of 85 percent to 665.2 billion won last year. Precursor production capacity jumped fourfold during the same period.

“Our capacity will be expanded to 210,000 tons in 2027 with two more factories to be opened in 2025," Kim said.

A third factory is scheduled to start production in January 2025 and a fourth one in July 2025.

Kim also vowed to expand the firm's client roster, which is currently filled around 90 percent with clients that come from EcoPro BM, its affiliate.

“We have two more clients, other than our affiliates, set for the next five years,” Kim added. “The percentage of sales coming from other companies will grow to 30 percent in 2025 and 50 percent in 2027.”

The two-day book building for institutions will end Friday, while public subscription is scheduled for Nov. 8 and 9.

Mirae Asset Securities is the main underwriter for the IPO.

BY SARAH CHEA [chea.sarah@joongang.co.kr]