Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
LG Energy Solution contemplates IPO destination
People walk past LG Group's headquarters on Yeouido, Seoul, in this file photo. / Korea Times file
By Kim Bo-eun
By Kim Bo-eun
Following the spinoff of LG Chem's battery business earlier this month, attention is now focusing on where the new corporate body LG Energy Solution will conduct its planned IPO.
While the company states key decisions have yet to be made, earlier remarks by key executives have indicated the unit is considering overseas.
"We will review an IPO based on the amount of funds needed after setting up the new corporate body," LG Chem's CFO Cha Dong-seok told major shareholders in a conference call in September. "Other markets will not be ruled out considering their size and adequacy."
Cha referred to the case of LG Display. The former-LG Philips Displays was a 50-50 joint venture set up by LG Electronics and Philips Electronics of the Netherlands. The company debuted on both the KOSPI and the New York Stock Exchange (NYSE) in 2004.
LG Vice Chairman Kwon Young-soo led the stock market debuts as the then-LG Electronics CFO. Kwon is now chairman of LG Chem's board.
The NASDAQ appears to be the most likely destination for LG Energy Solution. The tech-heavy NASDAQ ranks second among global stock exchanges by market capitalization of shares traded, after the NYSE.
The NASDAQ's listing conditions also happen to be relatively simple, as foreign companies are required to meet the same conditions as those of local entities. Given the conditions are met, a foreign company can make a relatively quick and easy debut on the stock exchange.
Speculation is that LG Chem's spin off of the battery unit in December this year was to enable the latter's listing on the NASDAQ by next year.
Listing on the KOSPI, meanwhile, takes over three years. This is because local regulations require a company to have operated for three years to be able to submit documents to be reviewed for an IPO.
A timely IPO is crucial for LG's new unit given it is in need for funds to invest in production facilities.
LG Energy Solution has pledged to boost its annual production capacity to 260 gigawatt hours by 2023, from 120 gigawatt hours as of this year through expanding its production facilities. The company already needs over 3 trillion won to produce existing orders.
According to filings by LG Chem, the new unit holds 100 billion won in capital and 1.8 trillion won in cash and cash equivalents. This points to why a quicker listing will make sense for the company.
Analysts also view listing on the NASDAQ may facilitate support from the U.S. administration, which is seeking to foster an ecosystem for EVs.
A NASDAQ listing will likely help LG see a boost in corporate value as one of the top players in the EV battery market, along with China's CATL.
LG Energy Solution President Kim Jong-hyun stated plans for the company to make 30 trillion won in annual revenue by 2024, from an estimated 13 trillion won this year.