LG Energy Solution Prepares for Over $10 Billion IPO

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Jan. 4 2022, Published 10:07 a.m. ET

LG Energy Solution, an affiliate of LG Chem Ltd., is getting ready for its IPO. It should start trading on the Korean Stock Exchange by the end of January. The IPO could raise up to $10.8 billion and make it South Korea’s largest IPO to date, according to Morningstar.

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The EV battery manufacturer supplies batteries to companies making EVs such as Tesla, GM, and Hyundai. Taking the company public will enable it to pay down debt, boost capital expenditure, and meet existing capital needs, according to the filing. When is the LG Energy Solution IPO date?

What can investors expect from LG Energy Solution's IPO date and price?

In the offering for LG Energy Solution, the company is selling 42.5 million shares at a price range of 257,000–300,000 won. The banks advising in the IPO plans are Morgan Stanley, BofA Securities, and Citigroup.

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The retail subscription period for the LG Energy Solution IPO will start on Jan. 18. The shares are expected to start trading on the KSE on Jan. 27.

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According to Reuters, LGES CEO Kwon Young Soo said, “Through this IPO, we are preemptively responding to the demand for the lithium-ion battery market, which is expected to see rapid growth.”

LG Energy Solution's IPO will break a South Korean record.

The LG Energy Solution IPO is expected to be the largest one on the Korean Stock Exchange to date. The previous record for a South Korean IPO was 4.9 trillion won ($4.12 billion) set by Samsung Life Insurance in 2010, Reuters reported. In comparison, at the top end of its proposed price range, LGES will raise 12.75 trillion won.

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According to Seeking Alpha, LGES is the largest electric battery maker in Korea and it controls nearly 25 percent of the global EV market. A $55 billion valuation for LGES would also beat the valuation of its parent company, LG Chem Ltd.

In December 2021, Reuters noted that some analysts thought that the valuation was too low.

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For example, Meritz Securities analyst Rho Woo-ho said, “I think they lowered the price range on purpose, first to build a market consensus that it's good value, and second, because (parent) LG Chem intends to hold on to about an 80% stake, the amount of traded shares will be very small, which will drive up demand and the share price.”

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LG Energy Solution has a solid history.

LG Chem, the parent company of LG Energy Solutions, was founded in 1947. In 1992, the company started to research and develop lithium-ion battery technology.

Vehicle manufacturers currently using LG Energy Solution’s lithium-ion batteries include Tesla, General Motors, and Hyundai. Volkswagen had a deal with LGES for pouch-type batteries but it started to move towards prismatic batteries in the spring of 2021. Volkswagen might be switching to CATL or Samsung SDI for those needs.

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As of 2020, the company said there were over 4.5 million electric vehicles on the road with batteries supplied by LGES. As of May 2021, it had 24,731 patents in the lithium-ion battery space.

LGES has pledged that by 2030 it will switch 100 percent of its company electricity to renewable sources and only use eco-friendly company cars.

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