EcoPro Materials, a precursor production subsidiary of EcoPro Group, has secured an investment of 400 billion won and is set to embark on its full-scale entry into the nickel smelting industry in Indonesia, businesskorea.co.kr reported.
EcoPro Materials recently secured a total of 389 billion won through a third-party allotment capital increase. Most of this funding will be used to acquire a 28% stake in the Indonesian nickel smelting company, PT Green Eco Nickel, and for the operation of the smelting facility.
Established in June 2023, Green Eco Nickel is a subsidiary of China's GEM, which has maintained a long-standing partnership with EcoPro. Last year, the holding company EcoPro secured a 9% stake. With EcoPro Materials acquiring an additional 28%, it becomes the largest shareholder, and the holding company plans to further increase its stake, ultimately securing a 38% share at the group level. The nickel metal production capacity at Green Eco Nickel is approximately 20,000 tons annually.
The acquisition of Green Eco Nickel's stake and the business combination report are expected to be completed as early as April. Song Ho-jun, CEO of EcoPro, stated at the holding company's shareholders' meeting on March 26, “EcoPro Materials has raised funds to acquire the Indonesian Green Eco Nickel smelting facility and plans to complete the business combination report by the end of April at the earliest. Once EcoPro Materials' Indonesian smelting subsidiary begins full-scale operations, it is expected to have a positive impact on EcoPro Materials' performance as it is incorporated as a consolidated subsidiary.”
Read also : GEM, EcoPro to increase Indonesia precursor plant capacity
EcoPro Materials' fundraising was achieved through the issuance of redeemable convertible preferred shares (RCPS). RCPS refers to preferred shares that have the right to be converted into common shares after a certain period and the right to be redeemed. The scale of the preferred shares issued this time is 5,120,167 shares, and the issue price was set at 75,974 won, a 11.876% premium over the reference stock price of 67,908 won.
Investors can choose to redeem the funds with interest either three years or five years later, or convert them into common shares starting April 9, 2026. Since the converted common shares can be traded, the company explained that there is little concern about stock price instability over the next year.
The fact that investors opted to invest at a price approximately 12% higher than the reference stock price, with the possibility of converting to common shares after one year, is analyzed as a positive assessment of EcoPro Materials' future growth potential. Major investors include IMM Investment, IMM Credit Solutions, JKL Partners, and Mast Partners. Through the issuance of RCPS, EcoPro Materials has also been able to enhance its financial soundness. The funds raised are recognized as full capital in accounting, as the right for investors to demand fund redemption (put option) is excluded in the RCPS issuance process.
An EcoPro Materials representative stated, “We have secured large-scale investment funds in a timely manner to enter the Indonesian smelting business,” and added, “It is also positive that we have been able to reaffirm market expectations for EcoPro Materials' future growth potential.”
Editing by Reiner Simanjuntak
