SK's cybersecurity arm IPO to boost cross-border M&A: CEO

SK Shieldus, the cybersecurity service arm of South Korea’s third-largest conglomerate, is poised to use the proceeds from its imminent initial public offering to pursue cross-border mergers and acquisitions, its Chief Executive Officer Park Jin-hyo told reporters Tuesday.

Cloud computing security firms would be the major target for a strategic investment, which would allow the nation‘s No. 1 security service firm to make a foray into overseas markets, Park said.

“We are proactively pursuing cross-border mergers and acquisitions. Our goal is to secure immediate growth momentum through the acquisition of a cloud computing security firm,” Park told reporters at a virtual press conference.

The deals would leverage the company’s growth, also spurred by the low penetration rate of physical security services in Korea and the benefits that Korea’s stricter security rules entail, Park added.

This comes as SK Shieldus, formerly a Korean arm of US home security provider ADT, is gearing up for an IPO in May that is expected to raise up to 1.05 trillion won ($840.8 million) by floating 27.1 million shares, a prospectus showed. The shares will be floated between 31,000 won and 38,800 won apiece.

About half of the total proceeds will go to SK Shieldus’ second-largest shareholder Macquarie, as it offloads part of its stake in the company. Some 20 percent of the proceeds will be used to funnel SK Shieldus’ acquisition plan.

SK Shieldus is scheduled for book building with institutional investors on May 3-4, and a share offering for retail investors on May 9-10. The company is expected to start trading on the Korea Exchange on May 19. NH Investment & Securities, Morgan Stanley and Credit Suisse are lead underwriters of the deal.

SK Shieldus is dedicated to both physical security and cybersecurity services. Its operating profit jumped nearly fivefold in 2021 to 121.9 billion won, compared to a year before.

The company is now owned by SK Square, an ICT spinoff of telecommunication firm SK Telecom, and global financial services firm Macquarie Group. SK Shieldus would become the first company among SK Square subsidiaries to go public.

Park called SK Shieldus a Korean equivalent of Mandiant, which became the target of Google parent Alphabet’s second-largest ever acquisition in a $5.4 billion deal announced earlier in March.

SK Shieldus valuation at the stage of the IPO is set at up to 3.5 trillion won, and its largest shareholder will remain SK Square with a controlling 53 percent stake as a result of the flotation.

(consnow@heraldcorp.com)