'LG Energy Solution' to Spin Off in December... Plans for IPO by End of Next Year

LG Chem to Confirm at Today's Board Meeting

[Asia Economy Reporter Park So-yeon] LG Chem's battery division will become an independent entity under the tentative name 'LG Energy Solution.' LG Chem plans to complete the spin-off process of the battery division, including organizational restructuring and personnel reallocation, by the end of this year, and to raise substantial funds through an initial public offering (IPO) by the end of next year, enabling investments in facilities and research and development (R&D). Related article on pages 4 and 18

On the morning of the 17th, LG Chem held an emergency board meeting and approved the spin-off plan for the battery division responsible for electric vehicle batteries. The battery division produces automotive batteries, small batteries, and energy storage systems (ESS). The spin-off date for the battery division is set for December 1 of this year. LG Chem will separate the battery division as a wholly owned subsidiary through a physical spin-off. Existing LG Chem shareholders will continue to hold only LG Chem shares as before. The new corporation will be named LG Energy Solution.

The newly established LG Energy Solution will also pursue an IPO to raise large-scale funds. Preparations for the IPO will begin next year, with plans to list as early as the end of the year. LG Chem's business is divided into battery, petrochemicals, advanced materials, and life sciences divisions, but after the spin-off, the battery division, represented by electric vehicle batteries, will be evaluated independently by the market.

Industry insiders interpret LG Chem's spin-off as an aggressive investment declaration to become the world's number one battery company. Since LG Chem will retain 100% ownership of the spun-off battery division, it will maintain control and can attract massive investment funds through future IPOs. The funds raised through the IPO will be invested in expanding and establishing local factories in Poland, the United States, and China. LG Chem, as the global leader in electric vehicle batteries, has secured a large volume of orders from global automakers. As of the end of last year, LG Chem's backlog of electric vehicle battery orders reached 150 trillion won.

To fulfill this volume, an investment of about 10 trillion won will be required, making securing funds an urgent matter. A battery industry official said, "Since LG Chem holds all shares of its battery subsidiary, it can maintain control and will be able to attract massive funds through listing or share sales in the future, which will enhance competitiveness through expanded investment."

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