|The headquarters of LG Group located on Yeouido, Seoul. / Yonhap|
LG Energy Solution to go public as early as the end of Q3
By Anna J. Park
LG Energy Solution, an EV battery manufacturing subsidiary of LG Chem, has accelerated its public offering schedule, aiming to be listed on Korea's benchmark KOSPI by sometime around the end of the third quarter this year.
According to industry sources familiar with the issue, the global lithium-ion battery manufacturer plans to go forward with listing on the NASDAQ, after completing the initial public offering (IPO) process for the KOSPI market.
"The firm plans to get listed on the NASDAQ once it finishes the IPO process with the KOSPI index," a high-level industry source familiar with the issue said. "As decisions related to IPOs should be confirmed by the company's board of directors, the company's listing plans are expected to be approved by the board of directors as early as sometime around next month."
The source also expected the EV battery manufacturer will make its KOSPI debut as early as the end of the third quarter.
This timeline of completing the KOSPI listing by the third quarter is ahead of what the market had previously expected: the company's IPO was forecast to be completed by the end of this year or early next year.
With this timeline in mind, the company plans to send out RFPs (requests for proposals) soon to major investment banks to select its main underwriter companies for the public offering.
The company said its detailed IPO schedule will be announced once the official timeline is confirmed.
NASDAQ is key for further advancement
One of the reasons behind the firm's accelerated IPO plan for the KOSPI as well as the ensuing NASDAQ listing is the deepening global competition in the fast-growing EV battery market. Competition in the EV battery sector has been fiercer than ever, as the world's electric vehicle market is expected to log fast growth in upcoming years.
While the company, which was spun off last December, is one of the world's biggest lithium-ion battery manufacturers supplying EV batteries to leading automotive companies, including GM, Ford, Chrysler, Volkswagen and Renault, its predecessor LG Chem had been holding about 22.6 percent of the global EV battery market share from January to November last year, closely chasing behind its Chinese competitor CATL at 24.4 percent. Until October last year, the global market share of LG Chem was higher than CATL, yet a rapid growth in the number of electronic vehicle sales in China pushed CATL to the top position.
Amid the competition, it aims to take the top spot back by increasing R&D with the capital raised through the public offering.
"As the battery business requires huge amounts of investment, the new spun-off company will increase investment through various capital-raising initiatives. Based on the increased investment, it will consolidate the global top position in the sector," LG Chem Vice Chairman & CEO Shin Hak-cheol said at shareholders' meeting in October, when LG Chem decided to separate its battery unit.
Given the firm's ambitious plan to increase its battery revenue to about 30 trillion won by 2024, there have been market rumors that the company will pursue NASDAQ listing to raise more capital in a faster manner. The market had also suspected that the company might go forward with simultaneous listing on both the NASDAQ and KOSPI markets.
However, it seemed that LG Energy Solution decided to list itself on the Korean stock market first prior to NASDAQ listing due to local considerations.
Market watchers speculate that the Korean government's long-term initiatives to support eco-friendly sectors through its Korean New Deal policy vision, as well as the efforts of the state-run market operator Korea Exchange (KRX) to boost the nation's battery sector through its newly created BBIG index (Bio-Battery-Internet-Game index) added a level of burden to the company's listing. The fact that the National Pension Service (NPS), which is one of the major shareholders of LG Chem, cast an objection vote to the creation of the spin-off company also adds pressure to the firm for its IPO plan to move in a direction beneficial to the local economy as well.
LG Energy Solution's IPO is expected to be Korean stock markets' biggest IPO of 2021 with its corporate value estimated to be around 100 trillion won ($91 billion), given that its main Chinese competitor CATL's market cap is standing at around $110 billion. According to market analysts, the firm is expected to raise around 10 trillion won in capital through the IPO process in Korea.
Although the company may go public in the Korean stock market first, other market insiders point out that raising capital is key to enhancing competitiveness of the EV battery manufacturer.
"A massive amount of investment is a must to meet fast-growing demands for EV batteries in the areas of expanding factories and increasing R&D costs. The competitiveness of Korean battery suppliers will be up to its capacity to raise capital in the end," a market insider highlighted.