Doubts are emerging over whether SK Group will be able to find an investor for its lubricants business, SK Lubricants Co Ltd, after a series of previous failed attempts.

The South Korean conglomerate is sounding out interest for a minority stake in SK Lubricants, which produces lubricant base oils used for the automotive industry, sources said on August 21. Citigroup Global Markets Korea Securities has been hired to lead the sale process after SK Group invited only a handful of foreign investment banks to pitch for the stake sale, according to sources.

The move came after the group’s several previously failed attempts to raise funds through the sale of the lubricant producer’s shares in both public and private markets. In 2015, SK Group entered into negotiations with private equity firm MBK Partners to sell the company but the deal collapsed due to a disagreement over the price. It also tried to take the company public in the same year and again in 2018 but none of these attempts succeeded because of the valuation gap.

SK Lubricants could be worth as much as 5.2 trillion won ($4.3 billion) based on the upper end of the target price range for its canceled initial public offering (IPO) in 2018. But most analysts put the valuation lower than that, noting concerns about an oversupply of lubricant products and the rise of electric vehicles.

“SK Group did not want to lower the target price for (SK Lubricants’) shares despite advice from its bankers that the price was too high,” said an official from one of the banks that worked on the IPO. “The company’s senior executives including the chief executive officer and the chief financial officer were on the road show but even that was not enough to attract sufficient demand from foreign investors.”

Some industry watchers said this time could be different because SK Group seemingly has lowered its expectation as the lubricant business was hit by weak demand amid the Covid-19 pandemic.

“SK Group is well aware of the negative impact of the Covid-19 crisis on SK Lubricants’ business,” an industry insider said. “This means SK Group could be more flexible in negotiations with potential buyers this time.”

SK Lubricants’ earnings before interest, tax, depreciation and amortization (EBITDA) are expected to be at around 300 billion won this year. When the company was in talks with MBK Partners on the sale in 2015, the private equity firm reportedly made an offer that valued the company at about 2 trillion won based on the 2014 EBITDA of approximately 360 billion won. (Reporting by Byung-yoon Kim)