LG Electronics embarks on Indian unit's $1.8 bn IPO

LG Electronics India Pvt., wholly owned by LG Electronics Inc., has embarked on the process of going public to raise up to 2.6 trillion won ($1.8 billion) as it strives to make India its key export hub through facility expansion and mergers and acquisitions.

The Indian unit filed a preliminary prospectus of its initial public offering, or a draft red herring prospectus (DRHP), with the Securities and Exchange Board of India on Dec. 6. It typically takes about three months to complete a review of an IPO application.

Once it gets the nod from the securities authority, the Indian unit is expected to list on the local bourse in the first half of 2025. Its parent company will float 15% of the subsidiary in addition to issuing new shares.

Investment banking sources expect the home appliance giant to raise up to $1.8 billion through the IPO at a valuation of about $13 billion.

LG Electronics India will earmark the proceeds for expanding production capacity and research capabilities. It also plans to use them on M&As, said LG officials.

It is building a third plant in India. It operates factories in Noida, 30 km southeast of India's capital city and Pune.

If it makes a trading debut in India, it will become the second South Korean company to float on the South Asian country's stock market. In October, Hyundai Motor India raised $3.3 billion in India’s largest IPO and the carmaker’s first offshore stock market listing.

The Indian unit posted a record-high half-year revenue of 2.09 trillion won in the first half of this year. That figure nearly matched the 2.2 trillion won in sales the Indian unit recorded for all of 2020.

Its net profit in the January-June period this year soared 27% to 198.0 billion won compared with the year prior.

LG is pinning its hopes on the world’s most populous country, where the home appliance penetration rate in 2023 for refrigerators, washing machines and air conditioners stood at 38%, 17% and 8%, respectively, far below that of China.

The increase in working women and nuclear families added to the rosy outlook for India’s home electronics market.

The Korea Trade-Investment Promotion Agency forecasts India’s home appliance market expanding to $21 billion in 2025 from $11 billion in 2018.

The flood of capital into the Indian stock market is expected to facilitate its offering.

Cho Joo-wan, chief executive of LG Electronics, said in a recent interview with Bloomberg that the company retains the top spot in India’s home appliance market and expressed optimism about its growth there.

He will stay on as CEO next year.

Write to Chae-Yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article.