April 19, 2024

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[THE INVESTOR] SK Group is planning to spin off its online shopping site 11st from SK Planet, according to industry sources on June 19.

SK planet, which currently operates 11st said that it is considering a spin off, but declined to confirm any details.

According to sources, the biggest shareholder of SK Group, SK Telecom will hold a board meeting on June 19 to discuss the plan and finish the spin off process before the year-end.

The company believes spinning off the e-commerce division can make the decision making process faster to achieve better competitiveness in the highly competitive market here, the sources said.

Furthermore, the National Pension Service has decided to inject 400 billion won (US$362.15 million) in 11st after the spin-off. Korea’s state-run pension fund will invest through a 500 billion won funding package led by private equity firm H&Q. The private equity firm will acquire 15 to 20 percent share of the spun off entity, according to industry sources.

SK Planet has been considering measures to improve its money losing online business due to fierce competition here – 11st posted 991.6 billion won in sales with 279.7 billion won operating loss last year.

In 2016, the company discussed with a Chinese PEF to receive 1.3 trillion won funds but failed to close the deal. Moreover, SK Planet has also talked with retail giants like Lotte and Shinsegae to sell 11st’s Korean operations, but failed to sign a deal as SK Telecom -- its parent company -- refused to accept terms of the deal.

By Song Seung-hyun (ssh@heraldcorp.com)