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LG Energy Solution IPO could test Citigroup's friendship with SK

Citigroup Center in New York / AP-Yonhap
Citigroup Center in New York / AP-Yonhap

Morgan Stanley, Goldman Sachs considered strongest candidates

By Park Jae-hyuk

Attention is focusing on whether LG Energy Solution will select Citigroup Global Markets Securities as an underwriter for its planned initial public offering (IPO), despite the U.S. investment bank's close ties with SK Group, which is in fierce rivalry with LG Group in the electric vehicle (EV) battery market.

The EV battery manufacturing subsidiary of LG Chem has already decided not to send out requests for proposals (RFPs) to the underwriters for the listing of SK IE Technology (SKIET) ― JPMorgan Chase, Credit Suisse, Mirae Asset Daewoo and Korea Investment & Securities ― to prevent a conflict of interest, according to sources.

SKIET, which makes core components for EV batteries and flexible displays, is a subsidiary of SK Innovation which is engaging in an intensifying legal battle with LG Energy Solution in the United States over patent infringement allegations. When SKIET started procedures to go public last year, some investment banks intentionally stayed out of the deal so that they could participate in the listing of LG Energy Solution, whose valuation is estimated at up to 100 trillion won ($90 billion), much larger than SKIET's 5 trillion won valuation.

Citigroup is not taking part in the SKIET IPO, so it could be included in domestic and foreign investment banks that received RFPs from LG Energy Solution last week, along with Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch.

However, Citigroup's recent collaborations with SK Group may hamper it from winning the bid.

Earlier this month, it successfully advised SK Holdings and SK E&S on their combined 1.6 trillion won investment in the U.S. hydrogen fuel cell company Plug Power. Last October, Citigroup served as the adviser to SK hynix on its acquisition of Intel's NAND memory and storage business for $9 billion, the largest ever in the domestic M&A market.

In the local IPO market, Citigroup was the lead underwriter for the listing of SK Biopharmaceuticals on the KOSPI, which was one of the largest deals on the Seoul bourse last year. The investment bank is also serving as the adviser to SK Innovation on its planned sale of a part of its stake in SK lubricants.

Given Citigroup's loyalty to LG Group will likely be the core factor in selection of the underwriter for the LG Energy Solution IPO, market observers are wondering whether the conglomerate would test Citigroup's friendship with SK Group in a tender presentation scheduled for Thursday.

"Details on our IPO will be announced when the official timeline is confirmed," an LG Energy Solution spokesman said.

At this moment, Morgan Stanley and Goldman Sachs are considered the strongest candidates because they reportedly gave advice to LG Chem when it considered spinning off its EV battery business.

However, Goldman Sachs' track record in various deals involving Samsung Group is regarded as another variable, considering LG Energy Solution did not send an RFP to Samsung Securities. The nation's largest conglomerate is also engaging in the EV battery business through its subsidiary, Samsung SDI.


Citigroup Center in New York / AP-Yonhap
Citigroup Center in New York / AP-Yonhap

Morgan Stanley, Goldman Sachs considered strongest candidates

By Park Jae-hyuk

Attention is focusing on whether LG Energy Solution will select Citigroup Global Markets Securities as an underwriter for its planned initial public offering (IPO), despite the U.S. investment bank's close ties with SK Group, which is in fierce rivalry with LG Group in the electric vehicle (EV) battery market.

The EV battery manufacturing subsidiary of LG Chem has already decided not to send out requests for proposals (RFPs) to the underwriters for the listing of SK IE Technology (SKIET) ― JPMorgan Chase, Credit Suisse, Mirae Asset Daewoo and Korea Investment & Securities ― to prevent a conflict of interest, according to sources.

SKIET, which makes core components for EV batteries and flexible displays, is a subsidiary of SK Innovation which is engaging in an intensifying legal battle with LG Energy Solution in the United States over patent infringement allegations. When SKIET started procedures to go public last year, some investment banks intentionally stayed out of the deal so that they could participate in the listing of LG Energy Solution, whose valuation is estimated at up to 100 trillion won ($90 billion), much larger than SKIET's 5 trillion won valuation.

Citigroup is not taking part in the SKIET IPO, so it could be included in domestic and foreign investment banks that received RFPs from LG Energy Solution last week, along with Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch.

However, Citigroup's recent collaborations with SK Group may hamper it from winning the bid.

Earlier this month, it successfully advised SK Holdings and SK E&S on their combined 1.6 trillion won investment in the U.S. hydrogen fuel cell company Plug Power. Last October, Citigroup served as the adviser to SK hynix on its acquisition of Intel's NAND memory and storage business for $9 billion, the largest ever in the domestic M&A market.

In the local IPO market, Citigroup was the lead underwriter for the listing of SK Biopharmaceuticals on the KOSPI, which was one of the largest deals on the Seoul bourse last year. The investment bank is also serving as the adviser to SK Innovation on its planned sale of a part of its stake in SK lubricants.

Given Citigroup's loyalty to LG Group will likely be the core factor in selection of the underwriter for the LG Energy Solution IPO, market observers are wondering whether the conglomerate would test Citigroup's friendship with SK Group in a tender presentation scheduled for Thursday.

"Details on our IPO will be announced when the official timeline is confirmed," an LG Energy Solution spokesman said.

At this moment, Morgan Stanley and Goldman Sachs are considered the strongest candidates because they reportedly gave advice to LG Chem when it considered spinning off its EV battery business.

However, Goldman Sachs' track record in various deals involving Samsung Group is regarded as another variable, considering LG Energy Solution did not send an RFP to Samsung Securities. The nation's largest conglomerate is also engaging in the EV battery business through its subsidiary, Samsung SDI.


Park Jae-hyuk pjh@koreatimes.co.kr


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