LG CNS set to price February IPO at top of price band

LG CNS Co., an information technology service company, is set to price its initial public offering at the top of its proposed price range to raise 1.2 trillion won ($821 million) in an initial public offering, according to investment banking sources on Wednesday.

The IPO met with strong demand from some 2,000 institutional investors in its Jan. 9-15 bookbuilding, defying the sluggish domestic stock market.

A vast majority of them bid for LG CNS at the top of its price band of 61,900 won or above, said the sources.

In its second attempt to go public, LG CNS has lowered its enterprise value to 6 trillion won from the earlier estimation of 7 trillion won.

If the stock is priced at the upper end, its market capitalization will reach 6.0 trillion won in what would be a high-profile listing in South Korea this year.

LG CNS is slated to list on the Korea Exchange in early February after receiving subscriptions from retail investors Jan. 21-22.

Its strong performance in bookbuilding was in stark contrast to the tepid response to K Bank’s IPO. Last week, the internet-only bank dropped its listing plan for the third time.

Analysts hope LG CNS’ stock market debut will revive the IPO market.

“LG CNS’ IPO will be an important turning point for the recovery of the IPO market,” said Lee Chang-hee, an analyst at Samsung Securities.

Its IPO will comprise existing shares and new issues at a 50:50 ratio.

LG Corp., the holding company of LG Group, is the IT company’s largest shareholder with a 49.95% stake, followed by Macquarie with a 35.0% stake. Macquarie acquired the shares from LG Corp., for 950 billion won in 2019.

During the IPO, the Australian bank will sell its 32% stake in LG CNS, while keeping the remainder for six months after the listing per a lock-up agreement.

LG CNS plans to acquire a foreign IT company with the proceeds from the IPO to accelerate its global expansion, according to its IPO prospectus filed last month.

Write to Seok-Cheol Choi and Jeong-Cheol Choi at dolsoi@hankyung.com
 

Yeonhee Kim edited this article.