KRX approves preliminary review of LG Energy IPO

The Korea Exchange (KRX) on Nov. 30 approved a preliminary review of LG Energy Solution Ltd.’s listing, paving the way for one of the largest-ever initial public offerings in the country to raise up to $10.7 billion.

LG Energy, the top South Korean battery maker, applied for the review of its plan in June to list its shares on the main Kospi. The review usually takes 45 working days, but the plan had been shelved for months due to uncertainty over its involvement in the recall of General Motors Co.’s electric vehicles.

LG Energy plans to file an IPO request with the KRX next month for a market debut in January.

The company was known to aim to raise 10.9 trillion won-12.7 trillion won ($9.2 billion-$10.7 billion) through the IPO with its corporate value estimated at up to 70 trillion won.

Its parent company LG Chem Ltd. plans to secure as much as 2.5 trillion won by sales of existing shares. It is set to use the proceeds for investment in petrochemicals and advanced materials in order to develop new future growth engines since LG Energy took over the battery sector, which had been a core business of the parent company.

LG ENERGY’S CORPORATE VALUE TO BE HIGHER THAN CATL

LG Energy’s share price is expected to start at double its IPO price and surge to the daily limit of 30% on the day of the stock’s market debut, local brokerage industry sources said, as the market capitalization of its rival CATL, China’s top battery maker, topped 290 trillion won.

“Global investors estimated CATL’s enterprise value at around 150 trillion won, considering Chinese companies’ stocks are usually inflated,” said a source at an investment bank in Seoul. “LG Energy’s value is expected to be higher than CATL that focuses on China’s domestic market since LG is supplying batteries to EV makers in the US and Europe.”

Retail investors are likely to chase the IPO. Their demand may set a new all-time high with deposits of more than 100 trillion from individual investors, some speculated. SK IE Technology Co., the battery materials subsidiary of SK Innovation Co., has the current record as it attracted a total of 80.9 trillion won in deposits in April.

Managers of LG Energy’s IPO are predicted to earn record commission fees on the deal. KB Securities and Morgan Stanley are lead managers, while Shinhan Investment Corp., Daishin Securities, Citi Group Global Market Securities Ltd., Goldman Sachs and Bank of America are co-managers. They are expected to pocket about 200 billion won in total with KB Securities taking more than 50 billion won.

Write to Ye-jin Jun at ace@hankyung.com
Jongwoo Cheon edited this article.