By New Delhi, June 27, 2024 – LG Electronics, the major South Korean multinational corporation known for its appliances and consumer electronics, is eyeing an initial public offering (IPO) for its Indian subsidiary, LG Electronics India Pvt Ltd (LGEIL). According to reports from Korean media Invest Chosun, the company aims to leverage the strong sales performance of its Home Appliance Division in India to raise substantial funds through the stock market, particularly via sales in Europe. This strategic move could secure hundreds of billions of South Korean won for the company.
The IPO Strategy
LG Electronics has already engaged foreign investment banks and local law firms to discuss the listing of LGEIL. While JP Morgan and Morgan Stanley are potential contenders for managing the IPO, this has yet to be confirmed. The company’s net assets are estimated at $825 million (1.1466 trillion won), with a projected corporate value ranging from $2.1 billion (3 trillion won) to $4.3 billion (6 trillion won).
A Long-Awaited Move
Interestingly, LG Electronics had initially planned an IPO for LGEIL in the early 2000s but postponed it due to unfavorable market conditions. Instead, the company focused on establishing factories and dealerships in regions like Pune. Now, with renewed confidence and a robust sales track record, LG Electronics is expected to authorize an underwriter soon to expedite the IPO process for its Indian subsidiary. The likely strategy involves selling existing shares, particularly those held by Hyundai Motors, rather than issuing new shares. If successful, LGEIL could raise at least $500 million through the IPO.
Following Hyundai’s Lead
This move by LG Electronics follows a similar initiative by Hyundai Motor, which recently filed draft papers with the Securities and Exchange Board of India (SEBI) for its own IPO. Hyundai aims to offer up to 142 million shares out of its total of 812 million, resulting in a 17.5% stake reduction by the promoters. The IPO, which will not involve issuing new shares, aims to raise approximately $3 billion or Rs 25,000 crore, making it one of the largest IPOs in India.