LG Energy Solution plans $ 11 billion IPO, Korea’s largest, in January
LG Energy Solution of South Korea, the world’s number two manufacturer of electric vehicle batteries, will offer 42.5 million initial shares next month at a price range of 257,000 to 300,000 won ($ 254) to raise a maximum of 12.75 trillion won in what would be the biggest Korean. IPO to date.
According to the IPO prospectus that the company submitted to the Financial Services Commission (FSC) on Tuesday, the company will set the price of the shares after institutional bookbuilding on January 11 and 12 for Kospi’s debut in late January. The result of the pricing will be announced on January 14.
Excluding 20 percent of the initial shares reserved for the association of employees, 55 to 75 percent would be allocated to establishments and 25 to 30 percent for public subscription.
When the price hits the high end of the forecast range, the IPO could more than double Samsung Life Insurance’s largest Korean IPO to 4.89 trillion won in 2010.
Since the outstanding shares would total 234 million, the market cap upon listing would peak at 70.2 trillion won, instantly making the stock Kospi’s third or fourth. Naver at No.3 was capitalized at 64.2 trillion won as of Tuesday’s close.
LG Energy Solution expects new equity of 10.2 trillion won from the issuance of 34 million new shares and its parent company LG Chem to 2.550 billion won by offering 8.5 million existing shares, or 4.25% of its 100% stake in pure-play battery maker It had spun a year ago. The total proceeds of 12.75 trillion won would be used to expand its facilities in Korea, North America, Europe and China, the company said in a press release.
Specifically, the new capital will be spent to increase the capacity of the Ochang plant in Korea and recapitalize its operations in North America, Europe and China to finance their expansion. The money will also go to R&D for new generation batteries and improving quality.
“Through the IPO, we plan to preemptively respond to the explosive demand for batteries and continue battery research and development to become the best in the world,” said Kwon Young-soo, vice president from LG Energy Solution.
LG Energy Solution battery usage reached 56.2 GWh in October this year, double the level of a year ago, to power 23% of the world’s electric vehicles on the roads, followed by China’s CATL with 28.2%, according to the latest data from market analyzer SNE Research.
The IPO is led by KB Securities, Morgan Stanley and the co-underwriters are Daishin Securities, Goldman Sachs, Merrill Lynch International and Citigroup Global Markets Securities.
LG Chem shares are trading up 2.4% to 728,000 won at the start of Wednesday’s trading.
By Hye-seung Seo
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