LG Energy Solution applies for IPO seen to raise over $9 bn

LG Energy Solution Ltd. has begun the official process of South Korea’s largest-ever initial public offering that is expected to raise over 10 trillion won ($9 billion).

On June 8, the electric vehicle battery maker applied for a preliminary review of its stock market listing by the Korea Exchange, which would take place in the third quarter of this year, according to investment banking sources.

LG Energy, a spin-off from LG Chem Ltd., is estimated at 100 trillion won ($900 million) in enterprise value. Its IPO will easily beat the previous record of 4.9 trillion won set by Samsung Life Insurance Co. when it went public in 2010. Morgan Stanley and KB Securities Co. are handling the IPO.

LG Energy produces rechargeable batteries for use in electric vehicles, smartphones, laptops and tablet PCs, as well as in energy storage system facilities. The rapid growth of the global EV market is expected to shore up its bottom line.

With the IPO proceeds, the company will expand its production capacity and increase research and development. In March of this year, LG Energy unveiled a plan to invest more than 5 trillion won by 2025 to ramp up its US battery business, including building a new plant.

Additionally, LG Energy and General Motors Co. said in April that they would spend 2.7 trillion won to build their second US EV battery plant in Tennessee through their joint venture, Ultium Cells LLC, in order to double the JV's EV battery output in the US.

In the first quarter of this year, LG Energy logged 341 billion won in operating profit on sales of 4.3 trillion won, which marked its first results as a stand-alone entity.

According to market research firm SNE Research, the company ranked as the world’s second EV battery supplier with a market share of 21.5% as of the end of April this year. In comparison, China’s CATL, the world’s top EV battery maker, controls 32.5% of the market.

OTHER UPCOMING IPOs

A slew of other high-profile IPOs are expected to flood the domestic stock market later this year. They include Krafton Inc., the label behind the global hit game PlayerUnknown’s Battlegrounds (PUBG); Kakao Bank; Kakao Pay, a mobile fintech platform; HK inno.N Corp., previously known as CJ Healthcare Co.; Hyundai Heavy Industries Co. and Lotte Rental Co.

The second-half IPO volume is estimated at 20 trillion won in proceeds, bringing the total amount to be raised including rights offerings close to 40 trillion won in all of 2021.

By Jin-seong Kim and Ye-jin Jun 

jskim1028@hankyung.com 

Yeonhee Kim edited this article.