LG Electronics India IPO bid slows down

A corporate flag flutters in front of LG Electronics' headquarters in Yeouido, Seoul, April 7. Yonhap

LG Electronics’ bid to list its Indian unit on the local stock market appears to be slowing down amid volatility in the global capital market stemming from the United States tariff measures.

According to industry officials, Wednesday, LG Electronics India recently completed its updated draft red herring prospectus (DRHP) for listing, but is still deliberating on the timing of its submission to the Securities and Exchange Board of India.

After receiving a provisional approval for the 150 billion rupee ($1.72 billion) initial public offering (IPO) bid last month, the company has been preparing the updated DRHP, a step that would pave the way for final IPO procedures such as the filing of the securities prospectus and book building.

Given this progress, market watchers had expected LG Electronics India to move swiftly and make its stock market debut as early as next month. However, the company is reportedly still considering the optimal timing for the submission.

Reflecting on the deliberation, Bloomberg News reported on Wednesday that LG Electronics India has paused work on the IPO because the company’s valuation may fall short of its expectation. The report noted that the company’s estimated value may have dropped to as low as $10.5 billion, significantly below the initial target of $15 billion.

An official at LG Electronics’ Korean headquarters said the IPO process is “ongoing” and “the final decision on whether to proceed with the listing will be made based on market conditions, though nothing has been confirmed at this stage.”

“We are closely monitoring the market and will consider the optimal timing that allows us to receive a proper valuation for the company,” the official said.

The cautious approach appears to be in line with the growing volatility in the global capital market, including that of India.

On April 7, the India Volatility Index skyrocketed 66 percent, marking its largest single-day jump in history. Ather Energy, an Indian e-scooter maker which was preparing an IPO, on Wednesday slashed its target valuation about 44 percent less than its original target.

“LG Electronics’ cautious approach appears to reflect the need for strategic timing amid the volatility in global stock markets, driven in part by recent shifts in U.S. trade policy under President Donald Trump,” an industry official said.

“Since LG Electronics maintains a stable financial structure, there is no urgent need for capital raising, making it more important to choose an IPO timing that can maximize the valuation the company seeks to achieve through the listing.”

Through the IPO, LG Electronics plans to sell its 15 percent stake in the Indian unit, without issuing new rights. The Korean headquarters has yet to clarify its plans for the funds, but analysts expect the company will likely use them as resources for buying back its own shares or a merger or acquisition for a heating, ventilation and air conditioning business.