LG delays decision on battery unit IPO to Q4

LG Chem Ltd.’s battery unit LG Energy Solution Ltd. will not be listed on Kospi within the third quarter. Investors are keeping close eyes on whether the company will postpone its IPO plans into 2022.

LG Energy Solution said in a statement on Aug. 30 that it will make the decision by October on whether to go public within this year. The postponement by the battery maker, which initially aimed to complete its IPO procedures within the third quarter, came after facing a major crisis on Aug. 27 with General Motors Co. (GM) recalling about 73,000 Chevrolet Bolt electric vehicles (EVs) equipped with its batteries. GM had also recalled 69,000 Bolt EVs in July for fire risks.

“Our company will comprehensively review the market environments including GM’s recall measures before concluding by October whether to continue the IPO procedures for 2021 listing,” said LG Energy Solution.

Market analysts estimate that GM’s recall of 142,000 Bolt EVs will cost $1.8 billion, a part of which LG Energy Solution will be responsible. Experts estimate that LG Energy Solution’s burden from the recall will be around $340-430 million. The South Korean battery maker, which had provisioned 91 billion won ($78 million) in the second quarter as a recall expense, is expected to book more funds in the third quarter as recall-related expenses.

LG Energy Solution applied for a preliminary review of its stock market listing by the Korea Exchange as early as June 8. The review was largely expected to close within this month, but the tides have now changed with the aggravation of the GM recall case.

“We have been a strategic partner with GM for more than 10 years. Our company will solve the recall issue wisely together with GM and continue the close partnership,” said LG Energy Solution.

The company added that GM is currently investigating the causes of battery fire together with LG Electronics Inc., the maker and supplier of the battery modules in question.

Write to Byung-uk Do at dodo@hankyung.com
Daniel Cho edited this article.