LG Energy Solution, World’s Second Largest EV Battery Maker, Set To Raise $10.7 Billion In South Korea’s Biggest IPO

LG Energy Solution (LGES), a South Korean battery-maker, is expected to raise 12.75 trillion won ($10.7 billion) this month in what will be the country’s largest-ever initial public offering (IPO).

In a regulatory filing, the world’s second-biggest electric vehicle (EV) battery maker, said that as many as 1,988 institutions have subscribed to its offering of 41.5 million initial issues, with all of the investors proposing to buy at the highest price range. LGES is offering 34 million new shares and nearly 8 million existing shares held by parent firm LG Chem in the IPO (Till now, LGES was a 100 per cent fully-owned subsidiary of LG Chem). The company had set the share price in the range of 275,000 won to 300,000 won (roughly $230-$250). The shares were oversubscribed by more than 2,023 times.

The IPO will catapult the company as the third most valuable firm on the Korea Stock Exchange after Samsung Electronics and SK hynix.

In Dec 2020, LG Chem officially set up LG Energy as a wholly-owned subsidiary by moving its battery business to the new entity.

LG Energy, currently the world’s second-largest EV battery maker, enjoys a 23.8 per cent market share. China’s CATL is the market leader with a 31.2 per cent share, while Japan’s Panasonic came in third at 13.3 per cent.

The company said that it will use the proceeds from the IPO to expand domestic and overseas production.

It proposes to expand production capacity at its facility in the South Korean city of Cheongju. The company, which currently operate a plan in Michigan as a joint venture with General Motors, is building two others in US – Ohio and Tennessee. Its European plant is based in the Polish city of Wroclaw.

LG Energy is also partnering with global carmaker Stellantis N.V. to build a battery plant in North America.

It is also seeking to establish a joint battery plant in the United States with Japanese automaker Honda Motor.