LG Energy Solution’s planned initial public offering (IPO) is attracting strong interest from large global institutions and domestic investors, with the South Korean battery company’s upbeat growth potential appealing especially to foreign investors.
Lead managers and bookrunners working on the deal were approached by large institutional investors from around the world about buying shares in the IPO even before a draft prospectus was filed, boosting prospects for a successful listing.
The response reflects a surge of interest in the South Korean IPO market from global institutions, with investment giant BlackRock and Singapore’s sovereign wealth fund GIC reportedly participating in the bookbuilding for the country’s three biggest listings last year, involving SK Biopharmaceuticals, Big Hit Entertainment and Kakao Games.
LG Energy Solutions is attracting scrutiny due to its solid market position in the rapidly growing electric vehicle (EV) battery market, industry watchers said. It held the second largest global share of 23.5% last year, behind Chinese battery maker CATL.
Foreign investors seem more optimistic about the growth prospects of LG Energy Solution, industry watchers said, as CATL’s customers mostly consist of local Chinese automakers, with its batteries mainly used for mid- and low-price EV models.
In contrast, LG Energy Solution serves global customers like Tesla, Hyundai Motor Group, BMW, General Motors and Ford, and it dominates the market for batteries used in premium EV models. The company’s backlog of orders is reportedly worth about 200 trillion won ($178.4 billion).
The timeline for the listing is unclear, but observers expect it to happen as early as the third quarter of this year.
If LG Energy Solution aims to issue 20% of the total shares, the deal size could be up to 16 trillion won, the largest in the country’s IPO market, given that the company is estimated to be valued at up to 80 trillion won. (Reporting by Kyung-ju Lee)