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LG Energy unveils IPO price band for Korea’s largest listing

Proposes price band between 257,000 won and 300,000 won; set to become third-most valuable company in the country

By Dec 07, 2021 (Gmt+09:00)

LG Energy unveils IPO price band for Korea’s largest listing

South Korea’s LG Energy Solution Ltd. has set an initial public offering price band for the largest-ever initial listing in the country next month to raise up to $10.8 billion.

LG Energy on Dec. 7 filed a registration statement to the Financial Supervisory Service. The top South Korean battery maker proposed a price band between 257,000 won and 300,000 won ($218.2 and $254.7) to raise 10.9 trillion won to 12.8 trillion won in January. The IPO would be more than double the current IPO record of Samsung Life Insurance that raised 4.9 trillion won in 2010.

LG Energy was scheduled to take necessary steps including bookbuilding for institutional investors and public subscription for retail investors to complete the IPO process in January.

Its market capitalization is expected to be at up to 70 trillion won right after the listing, becoming the country’s third most valuable company on the Kospi after Samsung Electronics Co. and SK Hynix Inc. If LG Energy’s stocks rise more than 20% from the IPO price, the company will overtake SK Hynix for the No. 2 place.

THIRD-MOST VALUABLE COMPANY AFTER LISTING

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, some local brokerage industry sources said, as the market capitalization of its rival Contemporary Amperex Technology Co. Ltd. (CATL), China’s top battery maker, reached about $251 billion.

Its parent LG Chem Ltd. split off its battery business unit to set up LG Energy in December 2020. The company produces secondary batteries and energy storage systems (ESS) for electric vehicles, smartphones, laptops and tablets.

LG Energy logged an operating profit of 692.7 billion won in the first three quarters of the year with sales of 13.4 trillion won thanks to rapid growth in the global EV market. The profit came even as the company set aside about 620 billion won in the third quarter due to the recall of the Chevy Bolt EVs equipped with batteries supplied by LG.

LG Energy is the world’s second-largest EV battery maker in the first ten months of the year with a 23% share of the market of EV batteries installed in EVs that have already been sold, according to market tracker SNE Research. CATL was the top supplier with a market share of 28.2% during the January-October period.

The South Korean battery maker plans to spend the proceeds from the IPO for capital expenditures with a target to more than double its annual production capacity to 260-gigawatt hours (GWh) by 2023 from 120 GWh last year. It has been expanding production facilities in other countries such as the US, China and Poland.

Meanwhile, LG Chem decided to sell a part of a stake in LG Energy, unloading 8.5 million existing shares out of 200 million stocks in the subsidiary to raise up to 2.6 trillion won.

Write to Jin-Seong Kim at jskim1028@hankyung.com

Jongwoo Cheon edited this article.
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