LG Electronics India listing completes price building, targets $1.24 bil. offering

An artist's rendering of the LG Electronics plant in Sri City, Andhra Pradesh, India / Courtesy of LG Electronics

LG Electronics said Wednesday it has completed the price building process for the much-anticipated listing of its Indian unit, which will debut on the local stock market Oct. 14.

The price band for the offering has been set between 1,080 and 1,140 rupees per share, which is expected to raise between 1.74 trillion won ($1.24 billion) and 1.84 trillion won for the company’s headquarters. LG Electronics will sell 15 percent of its stake in the unit through an offer for sale (OFS), with subscriptions opening on Tuesday.

LG Electronics said in a Korean regulatory filing that the Securities and Exchange Board of India recently granted the final approval of the Indian unit’s listing.

LG Electronics expects actual gains through the listing to surpass 1.74 trillion won, given the favorable valuation of the Indian unit in the market.

At the upper end of the price band, the unit’s post-listing market cap will hover over 12 trillion won, which is far higher than that of Whirlpool of India (2.4 trillion won), Voltas (7.2 trillion won) and other home appliance companies listed on the local market.

LG Group Chairman Koo Kwang-mo, center, inspects the air conditioner manufacturing process at the LG Electronics plant in New Delhi, March 4. Courtesy of LG Group

Since the listing involves no fresh issue of equity, LG Electronics headquarters will take all of the proceeds, which will serve as a resource for the company’s future investments.

The proceeds are expected to be used primarily for equity investments and mergers and acquisitions. LG Electronics has been restructuring its portfolio under a strategy of growing business-to-business areas, so the company is likely to concentrate the resources on promising sectors, particularly heating, ventilation and air conditioning (HVAC) for data centers.

Last year, LG Electronics invested a record 4.7 trillion won in research and development to strengthen its competitiveness in future growth areas such as artificial intelligence (AI), automotive electronics and HVAC systems. Earlier this week, LG Electronics CEO Cho Joo-wan met Saudi Arabia’s Investment Minister Khalid Al-Falih to discuss the cooperation, including supplying cooling solutions for an AI data center under construction in the kingdom’s NEOM city project.

The proceeds will also be a timely aid in stabilizing the company’s cash flow.

Amid the United States’ tariff measures and intensifying competition with Chinese TV makers, LG Electronics’ operating profit in the second quarter of this year plunged 47 percent year-on-year to 639.4 billion won.

This triggered the company to launch a voluntary redundancy program on its TV division, and it recently expanded the program across all business divisions.

A portion of the proceeds from the OFS may also be allocated to enhancing shareholder value through buying back its own shares.

The company’s price-to-book ratio, which compares its market value to book value, stood at 0.62 on Wednesday, which is far lower than the 1.2 average of stocks listed on the benchmark KOSPI.

Under Cho’s drive, LG Electronics has been scrambling to raise its stock price. In July, the company canceled treasury shares worth 60.2 billion won.

LG Electronics’ Indian unit posted 2.28 trillion won in sales and 209.7 billion won in net profit in the first half of this year, marking its highest half-year performance. Analysts project that the unit could achieve annual sales of 4 trillion won and a net profit of 400 billion won for the first time this year.