LG Energy Solution "Expanding Domestic and Overseas Plants through IPO... Narrowing Market Share and Market Cap Gap with CATL"

Successful IPO Secures Up to 12 Trillion Won Investment
Expanding Global Production Capacity and Next-Generation R&D New Businesses
Strategy for Battery No.1 Position with Production Capacity, Overseas Clients, and Technology

[Asia Economy Reporter Hwang Yoon-joo] LG Energy Solution is positioning itself as the number one brand in the electric vehicle battery market through its initial public offering (IPO). The strategy is to use the IPO investment funds to expand domestic and overseas production plants and narrow the market share gap with China's CATL. Furthermore, the company expressed its ambition to become a differentiated battery company with the world's number one technology in the next-generation battery field.

On the 10th, LG Energy Solution held an online press briefing at its Park One headquarters in Yeouido, Seoul, to unveil its mid- to long-term business vision and strategy. LG Energy Solution plans to finalize the offering price based on demand forecast results on the 14th of this month, conduct public subscription for general investors from the 18th to 19th, and finally list on the Korea Composite Stock Price Index (KOSPI) by the end of this month.

At the briefing, Kwon Young-soo, Vice Chairman and CEO of LG Energy Solution, said, "The challenges and innovation capabilities accumulated over the past 30 years have led to this meaningful result of an IPO," adding, "We will take the first step to prepare LG Energy Solution's 100-year future based on this listing."

◆ LG Energy Solution Secures 12 Trillion KRW in Funding Upon Successful IPO... Prioritizes Investment in Domestic and Overseas Plants= LG Energy Solution submitted a securities registration statement to the Financial Services Commission early last month and began the formal public offering process. The total number of shares offered is 42.5 million, with a desired offering price range of 257,000 KRW to 300,000 KRW per share. If the offering price is successfully finalized, LG Energy Solution and LG Chem will secure up to 12.75 trillion KRW (based on the 300,000 KRW offering price) in investment funds.

LG Energy Solution plans to use the funds raised through the IPO for ▲ investment to expand domestic and overseas production base capacity ▲ leading the future through next-generation battery research and development (R&D) and new businesses ▲ strengthening quality, safety, and securing differentiated profitability.

First, the funds will be used as operating capital to expand production capacity at domestic plants such as the Ochang plant, as well as overseas production bases in North America, Europe, and China. This will enable the company to respond to the demand of major customers located in overseas markets and establish a supply chain for local mass production, thereby enhancing cost competitiveness and customer responsiveness for efficient competition in the global secondary battery market.

In fact, LG Energy Solution plans to invest 5.6 trillion KRW by 2024 to expand production capacity at its North American Holland plant and GM joint venture Ultium Cells. The company will invest 645 billion KRW in the Korean Ochang plant by next year to establish a cylindrical battery production line for EVs, which has seen increasing demand recently. Additionally, it plans to invest 1.4 trillion KRW and 1.2 trillion KRW respectively in European and Chinese production plants by 2024.

◆ Increased Investment in Solid-State and Lithium-Sulfur Battery Development... Enhancing Safety Against Fires= LG Energy Solution is also focusing on developing next-generation batteries such as solid-state batteries and lithium-sulfur batteries. For solid-state batteries, the company is developing both polymer-based and sulfide-based types. Lithium-sulfur batteries, which offer advantages in weight reduction and cost competitiveness, are next-generation batteries for which LG Energy Solution is securing early technology in lifespan and performance, aiming to apply them to new markets centered on flying vehicles such as drones and Urban Air Mobility (UAM).

New businesses include ▲ establishing a resource circulation system such as battery recycling ▲ Battery as a Service (BaaS) platform business utilizing battery data for diagnostics and lifespan prediction ▲ integrated energy storage system (ESS) solution business, among other battery-related new ventures, to prepare for future competition.

On the day, LG Energy Solution announced measures to enhance the quality and safety of its products, including ▲ product design and process improvements related to major risks such as fires ▲ establishment and application of full product inline inspection systems ▲ development and application of Battery Management System (BMS) algorithms for early detection of defects. LG Energy Solution recently upgraded its existing Quality Center to a Chief Quality Officer (CQO) organization through organizational restructuring, significantly strengthening personnel and authority.

To secure profitability, the company is also actively pursuing cost reduction in materials. Specifically, it plans to ▲ secure stable supply and competitive pricing through long-term contracts with trusted strategic partners ▲ invest in shares of key suppliers and establish joint ventures (JVs) ▲ build a value chain from mining to precursors and cathode materials ▲ secure metals through recycling to enhance profitability.

Additionally, LG Energy Solution is promoting operational cost efficiency through early establishment of smart factories utilizing artificial intelligence (AI) and big data technologies. The company has agreed to cooperate with Siemens, a global leader in smart factory technology based in Germany, to build 'manufacturing intelligence' and is actively recruiting related top talent.

Meanwhile, the lead underwriters for LG Energy Solution's listing are KB Securities and Morgan Stanley International Securities, with joint underwriters including Daishin Securities, Shinhan Financial Investment, Goldman Sachs Securities, Merrill Lynch International LLC Securities, and Citigroup Global Markets Securities. Mirae Asset Securities, Shin Young Securities, Hana Financial Investment, and Hi Investment & Securities are participating as underwriting companies.

This content was produced with the assistance of AI translation services.