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ESG investment

LG Chem to invest $134 mn in incubator fund for firms with ESG tech

By May 11, 2021 (Gmt+09:00)

LG Chem to invest 4 mn in incubator fund for firms with ESG tech

LG Chem Ltd., South Korea’s leading chemical and battery maker, said on Tuesday it is investing 150 billion won ($134 million) in an incubator fund aimed at fostering companies focused on the environmental, social and corporate governance (ESG) sector.

LG said in a statement it will become an anchor limited partner in the Korea Battery & ESG (KBE) Fund, which aims to raise more than 400 billion won. The KBE Fund is operated by IMM Credit Solution, a subsidiary of Seoul-based private equity firm IMM PE.

The investment marks LG Chem’s first participation as a core partner in a fund run by a private equity fund operator.

The KBE Fund is designed to find and incubate Korean companies with growth potential in ESG, a trendy corporate management method that focuses on the use of green energy and eco-friendly projects.

The business fields to be reviewed by the fund include electric vehicle battery raw materials such as anodes and cathodes, and environmentally sound materials like bioplastics and recycled polymer products.

“This investment will be the stepping stone for LG to strengthen the ESG industry ecosystem together with promising small and medium-sized companies in Korea and to continuously discover future growth engines,” said LG Chem Vice Chairman and CEO Shin Hak-cheol.

SEEKING M&As, INVESTMENT IN ESG SECTOR

The chemical and rechargeable battery making unit of the LG Group has been seeking M&As and investment opportunities in battery materials companies.

As part of efforts to foster advanced materials business, LG Chem said it plans to hire battery-related employees in three-digit numbers this year. The company is also pushing to expand its anode production capacity to 260,000 tons by 2026 from 40,000 tons in 2020.

LG Chem's biodegradable material
LG Chem's biodegradable material

Anodes are a key raw material that accounts for about 40% of the manufacturing cost of EV batteries.

Separately, the company plans to hire some 100 workers this year for research and development of biodegradable plastic and other eco-friendly products.

LG Chem said in October last year it developed the world’s first 100% biodegradable plastic that can replace plastic.

The company aims to produce polyolefin (PO), super absorption polymer (SAP) and acrylonitrile butadiene styrene (ABS), all based on biomaterials, in the second half of this year.

Write to Jun-Ho Cha at chacha@hankyung.com

In-Soo Nam edited this article.

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