LG Energy Solution may launch IPO by year end

LG Energy Solution engineers inspect the company's battery products at its Ochang factory in North Chungcheong Province. Courtesy of LG Energy Solution

By Baek Byung-yeul

LG Energy Solution's mega-billion-dollar initial public offering (IPO) is expected to be go ahead as planned this year, after the electric vehicle (EV) battery maker said its recall negotiations with U.S. carmaker GM will be concluded this month, industry sources said Sunday.

Last year, LGES was spun off from LG Chem and unveiled a plan to make its KOSPI debut in October this year. Investors have paid keen attention as LGES's market value is estimated at around 100 trillion won ($83.57 billion) and the company will be able to raise around 10 trillion won in capital through the IPO, which would be the largest-ever listing in Korea.

However, the IPO was paused when GM decided to expand its battery recall after a number of its Bolt EVs caught fire in the U.S. in July. GM initially recalled only about 69,000 of the EVs, powered by LGES batteries and produced between 2017 and 2019, but later expanded it to the latest production volume. On Aug. 20, GM said it would expand the recall to all Bolt EVs equipped with LGES batteries, adding this would cost $1.8 billion.

Industry sources said LGES is planning to announce details of its provisions for the GM recall, and the time line of the IPO process this month, soon.

The sources added GM and LGES were discussing how much LGES and LG Electronics will each pay for the recall. LG Electronics supplied the battery modules that are made with battery cells from LGES to GM.

An announcement is expected to be made Oct. 12, the same day LG Electronics will reveal an earnings statement, or at the latest on Oct. 25 when LG Chem will release its earnings.

Although the pre-listing review process was delayed due to uncertainties caused by the recall, the review process can be completed by year's end if LGES pushes forward to list the company this month.

In regard to the IPO, a company official said an official announcement will be made within this month. “Negotiations on the battery recall with LG Energy Solution and GM are going smoothly,” the official said. “We have said that we will release details of the listing in October.”

LGES is one of the top EV battery makers. According to market tracker SNE Research, the company had the second-largest share of 24.5 percent in the global market between January and August this year, following CATL of China that had a 30.3 percent share. SNE Research said the company retained its market share thanks to rising sales of EVs from Tesla, Volkswagen and Ford.