Bank of America Merrill Lynch (BofA) has been chosen as a joint bookrunner on LG Energy Solution’s planned initial public offering (IPO), a decision that surprised many observers due to the investment bank’s limited presence in South Korea’s IPO market.
LG Energy Solution, the electric vehicle business split off from LG Chem, last week named KB Securities and Morgan Stanley to lead its listing on the Seoul stock exchange in what would be one of the largest IPOs in the country. BofA, Citigroup Global Markets Korea Securities, Goldman Sachs, Shinhan Investment and Daishin Securities were also appointed as joint bookrunners.
BofA has not been involved in any recent South Korean IPO. The investment bank last worked on Hyundai Rotem’s 2013 IPO, when it also acted as a joint bookrunner.
In contrast, the other three foreign investment banks have strong track records. Morgan Stanley led the 1.1 trillion won IPO of Orange Life Insurance in 2017 and was a joint bookrunner for the 959.3 billion won IPO of SK Biopharmaceuticals in 2020.
Goldman Sachs led the 4.88 trillion won IPO of Samsung Life Insurance in 2010 – the country’s largest deal to date – and the 1.52 trillion IPO of Samsung SDS in 2014. Most recently it worked on Orange Life Insurance’s IPO and also has been named to lead Kakao Pay’s planned IPO.
Citigroup Global Markets Korea Securities acted as a lead manager on SK Biopharmaceuticals’ IPO last year and the 2.24 trillion won IPO of Samsung Biologics in 2016. It is also serving as a joint bookrunner for the IPOs of Kakao Bank and gaming company Krafton.
BofA has built a relationship with some affiliates under LG’s wing, advising them on several large deals other than an IPO. The bank is leading LG Hausys’ sale of its auto materials and industrial film division, for which Hyundai BNG Steel was recently named as a preferred buyer. BofA also acted as a bookrunner for LG Display’s $600 million convertible bond issue in July 2019.
Some observers speculated that the bank may have benefited in the IPO race from the fact that one of its senior executives is related to the founding Koo family of LG Group on his mother’s side. (Reporting by Kyung-ju Lee)