LG Electronics plans IPO in India to boost fundraising, claims report

A South Korean business daily reported that the LG Group has approached foreign investment banks and local law firms to discuss the listing of LG Electronics in India's stock market

LG Electronics, a major South Korean company, is contemplating an initial public offering (IPO) for its Indian subsidiary, LG Electronics India Pvt Ltd (LGEIL), according to a Korean media Invest Chosun, the financial arm of Chosun media group.

The report claimed that the company aims to leverage the strong sales performance of its Home Appliance Division in India to raise substantial funds through the stock market, particularly through sales in Europe. This initiative could result in securing hundreds of billions of South Korean won.

The LG Group has approached foreign investment banks and local law firms to discuss the listing of LGEIL, the report indicated. JP Morgan and Morgan Stanley might be involved in managing the IPO, although this has yet to be confirmed.

 

Business Standard could not independently verify the report.

LG Electronics, headquartered in Seoul, is a leading South Korean multinational corporation known for its appliances and consumer electronics. It ranks as the fourth-largest chaebol (family-owned conglomerate) in South Korea, specialising in products like TVs, computers, appliances, and air conditioners. The report suggests that LG Electronics is expected to soon authorise an underwriter to expedite the IPO process for its Indian subsidiary. LG had initially planned for an IPO of LGEIL in the early 2000s but postponed it due to unfavourable market conditions, opting instead to focus on establishing factories and dealerships in regions such as Pune.

According to the report, LGEIL could raise at least $500 million through the IPO. The likely strategy involves selling existing shares, particularly those held by Hyundai Motors, rather than issuing new shares. LGEIL’s net assets are estimated at $825 million (1.1466 trillion won), with its corporate value projected to be between $2.1 billion (3 trillion won) and $4.3 billion (6 trillion won).

Hyundai’s IPO in India

This move by LG Electronics follows a similar initiative by Hyundai Motor. Hyundai has filed draft papers with the Securities and Exchange Board of India (SEBI) on June 14 to offer up to 142 million shares out of its total of 812 million in an IPO. 

The public offering includes an offer for sale (OFS) of 142.2 million equity shares, each with a face value of Rs 10, resulting in a 17.5 per cent stake reduction by the promoters.

The IPO, which will not involve issuing new shares, aims to raise approximately $3 billion or Rs 25,000 crore, making it one of the largest IPOs in India, trailing only Life Insurance Corp of India’s $2.5 billion issue in 2022.

Reportedly, Hyundai India is set to offload approximately 13 per cent of its stake in the forthcoming IPO. Despite this partial stake sale, the substantial size of the company is expected to generate nearly Rs 25,000 crore, surpassing the record set by LIC’s IPO, which was the largest in India. Experts suggest that Hyundai India’s IPO could help the automaker outperform leading competitors in the Indian market, such as Maruti Suzuki, Tata Motors, and Mahindra & Mahindra (M&M).