LG Energy takes on CATL as it prepares for Korea’s largest-ever IPO

LG Energy Solution Ltd. has vowed to outrival the world’s top battery player CATL as the South Korean company is preparing for the country’s largest-ever initial public offering worth as much as 12.75 trillion won ($10.6 billion).

Chief Executive Kwon Young-soo said during a press conference on Monday that LG Energy will start supplying batteries to a Chinese company sometime this year to enhance its presence in the world’s largest electric vehicle market.

He also said the company is working on a contract to build a joint venture with a global battery parts maker. He did not elaborate.

“CATL’s sales growth has mostly been backed by Chinese automakers with its client base largely limited to China. But we have a wider range of customers globally. We also have manufacturing facilities in the US and Europe as well as in China,” he said.

Even in China, he said LG Energy will actively pursue business tie-ups with local companies as the Chinese government plans to phase out subsidies for its battery makers from 2023.

LG Energy, owned by LG Chem Ltd., counts General Motors Co., Tesla Inc. and Volkswagen among others as its major global clients.

Kwon said LG Energy has an order backlog worth 260 trillion won, larger than that of CATL, and that he expects revenue growth of more than 25% over the next three years.

KOREA’S LARGEST-EVER IPO

Kwon’s ambitious plan to overtake China’s CATL comes as LG Energy is preparing for its IPO on the main Kospi market later this month.

The company will begin a two-day bookbuilding process on Tuesday to gauge institutional investor demand for the shares to be publicly offered.

LG Energy will offer 42.5 million shares via the IPO with an indicative price band of 257,000 won-300,000 won a share. Market watchers expect the IPO to be priced at the top end, allowing the company to raise 12.7 trillion won, the biggest-ever IPO in Korea.

If all goes to plan, the amount will be more than double the current IPO record of 4.9 trillion won set by Samsung Life Insurance Co. in 2010.

A successful IPO would put LG Energy’s enterprise value at 70.2 trillion won, rendering it the third most valuable company on the Korea Exchange upon its IPO, following Samsung Electronics Co. and SK Hynix Inc.

With the IPO proceeds, LG plans to expand its production capacity and increase research and development in Korea and abroad.

The public subscription for the IPO is set for Jan. 18-19 and the market debut is scheduled for Jan. 27.

Write to Hyung-Kyu Kim, A-Young Yoon and Ye-Jin Jun at khk@hankyung.com
In-Soo Nam edited this article.