SK Innovation will give potential external investors greater flexibility as they negotiate terms for the purchase of a minority stake in subsidiary SK Lubricants in an apparent attempt to boost prospects for a successful sale of the unit.

The first round of bidding is scheduled for Monday (November 30), industry sources said. Deal manager Citigroup Global Markets Korea Securities kicked off the sale process about two months ago and has sent out information packages on the unit to prospective buyers.

SK Innovation has said only that it intends to sell up to 49% of the lubricants company, and sources said the firm is asking potential bidders to nominate the size of the stake they want to buy, as well as other terms of the deal, along with their preliminary bids.

Potential bidders include local private equity firms seeking to earn a stable return, industry watchers said. Global buyout firms and strategic investors are unlikely to show interest in the unit because the deal doesn’t include a controlling stake.

“The deal is considered a pre-IPO (initial public offering) funding and likely looks attractive to private equity firms that are looking for stable returns with relatively lower risk,” said an industry insider. “Apart from bid prices, the terms offered by potential investors, such as downside protections, will be important factors that will influence (SK Innovation’s) decision.”

Wholly owned by SK Innovation, the lubricants unit produces base oil and finished lubricant products. It has a strong market position, especially in the global base oil market, although some potential buyers have cast doubt on the company’s long-term growth potential due to declining demand for cars with internal combustion engines. Earnings before interest, tax, depreciation and amortization amounted to 428 billion won ($385 million) last year.

The planned sale comes after SK Lubricants failed at three IPO attempts. The firm tried to list its shares on the Seoul stock exchange in 2013, 2015 and 2017, but eventually withdrew the plans due to a lower-than-expected valuation and tepid demand from investors. (Reporting by Hee-yeon Han)