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[Exclusive] IPOs

LG Energy to list end-January with enterprise value up to $67 billion

If all goes to plan, LG will become the third-most valuable company on the main bourse upon its IPO

By Nov 23, 2021 (Gmt+09:00)

LG Energy Solution
LG Energy Solution

LG Energy Solution Ltd. will list its shares on the main bourse around the end of January, valuing the top South Korean battery maker between 70 trillion won and 80 trillion won ($59 billion-$67 billion).

If all goes to plan, LG Energy will become the third most valuable company on the Korea Exchange upon its initial public offering.

The company plans to raise as much as 10 trillion won in capital through the IPO.

According to sources from the battery industry and KB Securities, the lead manager of LG Energy’s IPO, on Tuesday, the company is preparing to go public between Jan. 24 and Jan. 27.

LG plans to file an IPO request with the Korea Exchange next month and begin the bookbuilding process in early January to gauge institutional investor demand for its shares, the sources said.

“LG Energy’s corporate value will be decided at the level deemed appropriate by the market,” said a KB Securities source.

When LG assesses its enterprise value, industry officials said it will take into account China’s top battery maker CATL, the corporate value of which is close to 300 trillion won.

LG Energy’s IPO plan has been shelved for months due to uncertainty over its involvement in the recall of General Motors’ electric cars.

The company said in early October it is resuming its suspended IPO process after LG and GM concluded talks on how to proceed with the recall costs for GM EVs.

LG Energy Solution
LG Energy Solution

SHELVED FOR MONTHS

LG Energy Solution applied for a preliminary review of its plan in August to list its shares on the Korea Exchange with an aim to go public by the end of the third quarter.

However, the plan went awry after GM said in mid-August that it is recalling the Chevy Bolt EVs equipped with batteries supplied by LG due to fire risks after some of the vehicles caught fire.

LG Chem Ltd., the parent of LG Energy, and LG Electronics Inc., which assembles cells manufactured by LG Energy into battery modules, said at the time that they would fully cooperate with GM to look into the cause of the EV fires.

GM said last month LG agreed to reimburse it for nearly all of the $2 billion costs of recalling Chevrolet Bolt electric models. Separately, LG Group said it would shoulder 1.4 trillion won of costs associated with the recall.

LG Energy Solution and GM's Ultium Cells plant in the US
LG Energy Solution and GM's Ultium Cells plant in the US

With the IPO proceeds, LG plans to 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 GM 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.

Write to Yun-Sang Ko at kys@hankyung.com

In-Soo Nam edited this article.

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