Through Policy Financial Institutions in Korea and Europe
SK On, a battery business subsidiary of SK Innovation, has raised a total of US$2 billion for investment in Europe through policy financial institutions in Korea and Europe. The company plans to use the funds to finance the construction of its third European plant in Ivancsa, Hungary.
The policy financial institutions that helped SK On to secure funds were Euler Hermes, a German trade insurance agency, Korea Trade Insurance Corp., and the Export-Import Bank of Korea.
The three institutions provide guarantees or insurance for SK On in the process of getting loans from overseas banks. Germany’s Euler Hermes and Korea Trade Insurance Corp. will provide insurance worth USUS$800 million and USUS$700 million, respectively. The Export-Import Bank of Korea will offer a US$200 million guarantee. In addition, the Export-Import Bank of Korea will directly lend US$300 million to SK On.
The three institutions are public export credit institutions. The Export-Import Bank of Korea and Korea Trade Insurance Corp. highly evaluated the contribution that SK On’s European battery business makes to expanding Korea’s national interests. Euler Hermes is known to have participated in financing for SK On, as Volkswagen's cars loaded with SK On’s batteries are exported overseas.
The US$2 billion that SK On secured through this green export credit agency (ECA) financing is the largest among battery makers’ ECA deals ever made. Above all, it is the largest scale among Euler Hermes’s deals with Korean companies.
SK On plans to use the funds to accelerate the construction of its plant in Hungary. The company plans to invest a total of 3.31 trillion won in the Hungarian plant, which will supply batteries up to 30 gigabytes annually beginning from 2024.