SK Lubricants, a subsidiary of South Korea’s SK Innovation, has acquired a 49 per cent stake in Mekong Petrochemical JSC (Mekong Petrochem) for 50 billion won ($42.1 million).
The deal, which marks the SK Lubricants’ first overseas investment, is also part of its plan to expand in the Southeast Asia region.
Established in 1996, Mekong Petrochem is one of the top petrochemical companies in Vietnam and Southeast Asia.
The company is said to hold 6.3 per cent share in the Vietnamese lubricants market as of 2018.
Under the agreement, Mekong will distribute SK Lubricants’ products and develop base oil into products. Meanwhile, SK Lubricants said it has established an end-to-end value chain covering production, storage and retail across Vietnam.
The two sides agreed to replace Mekong’s old facilities and strengthen the sales network across the ASEAN region.
SK Lubricants is SK Innovation’s wholly-owned subsidiary for the base oil and lubricant business. It is the third-largest in the global base oil market in terms of market share while it holds 39.3 per cent of market share in the premium base oil (Group III).
The company developed a Group III base oil, YUBASE, through its own technology in 1995. Since then, it has produced and sold premium base oil and lubricants in 50 countries around the world.
Last year, it planned an initial public offering (IPO) worth up to 1.56 trillion won ($1.48 billion).
SK is one of the largest South Korean chaebols, with businesses across energy, chemicals, telecommunications, semiconductors, logistics and service sectors.
Most recently, Korea’s National Pension Service (NPS) and business juggernaut SK Group have reportedly joined forces to form a 1 trillion won ($860 million) fund to invest in Vietnam.
Earlier, SK Group picked up a 6.1 per cent stake in Vietnam’s behemothVingroup for $1 billion.