LG Energy Solution IPO Approved For January 2022

LG Chem's LG Energy Solution, one of the world's largest lithium-ion battery manufacturers, is going public in probably South Korea’s biggest-ever initial public offering (IPO).

The IPO has been known for some time. In December 2020, LG Chem established the wholly-owned subsidiary - LG Energy Solution - assigning it to its battery business.

According to Bloomberg, LG Energy Solution intends to issue 34 million new shares at a price between 257,000 won and 300,000 won each ($217-$254), which will be 8.74-10.2 trillion won ($7.4-8.64 billion).

Additionally, the parent company (LG Chem) intends to sell 8.5 million existing shares, so the total would be 42.5 million shares, potentially offered for up to 12.75 trillion won ($9.25-$10.8 billion).

The market cap of LG Energy Solution might be 70 trillion won ($59 billion) at the IPO, which means - as we understand - that the IPO concerns 18.3% of the company ($10.8 billion out of $59 billion). The remaining 81.7% would be directly in the hands of LG Chem.

"Retail and institutional investors can subscribe on Jan. 18 and 19, according to the IPO prospectus, which said 20 percent will be allotted to employees. Trading will begin on Jan. 27.

The offering could give LG Energy a market value of 70 trillion won ($59 billion)."

It's important for LG Chem to maintain a big share in the battery manufacturer, as the EV market/battery market is expected to grow fast and the value of LG Energy Solution might improve. It actually might become bigger than the rest of LG Chem.

On the other hand, the IPO was considered necessary to raise capital for the new investments in battery gigafactories around the world, as well as research and development. $10.8 billion appears to be enough for 4-5 battery gigafactories (assuming up to $2 billion for 50% of a joint venture plant with a carmaker).

A similar move is expected in the not too distant future from SK Innovation's SK On - created in October 2021.

See also

US: LG Energy Solution Will Expand EV Battery Production

Chevrolet Bolt EV/EUV Battery Recall Ruined LGSE Q3 Profitability

Stellantis And LG Energy Solution Announce Battery Joint Venture