LG Electronics' Indian Subsidiary to Be Listed on the 14th... Public Offering Price Up to 18,000 Won per Share

Valuation Expected to Exceed 12 Trillion Won
Up to 1.8 Trillion Won to Be Raised, Accelerating Future Growth
Secured Funds Likely to Be Used for Future Investments

LG Electronics announced on October 1 that it has received final approval from the Securities and Exchange Board of India (SEBI) for the listing of its Indian subsidiary, and that the subsidiary will be listed on the local stock market on the 14th.

LG Twin Towers in Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

The company also reported that the price band for the public offering of 15% of its Indian subsidiary's shares, which was approved for sale by the board of directors on September 30, has been finalized at between 1.7384 trillion and 1.8350 trillion won.

However, the company added that the actual proceeds from the sale could be determined at a higher level. If the offering price is set at the upper end of the range, LG Electronics' Indian subsidiary would be valued at over 12 trillion won. This is considerably higher than the market capitalization of peer companies listed on the Indian stock exchange. For example, the Indian subsidiary of US home appliance company Whirlpool has a market capitalization of about 2.4 trillion won, while Voltas, an appliance company under India's Tata Group, is valued at about 7.2 trillion won.

The public offering price per share is set at 17,000 won (1,080 rupees) to 18,000 won (1,140 rupees). The scheduled disposal date is the 13th, and the final listing date is set for the following day, the 14th.

Previously, LG Electronics had been following the necessary procedures for the listing of its Indian subsidiary. In December last year, the company submitted a preliminary listing review application, formally beginning its preparations. In March, it received preliminary approval for the listing from SEBI. As a result, there were expectations that the listing could take place as early as the first half of this year. However, in light of global market volatility, including fluctuations in the Indian stock market at the end of April, the company took a cautious approach to the listing schedule. On September 30, the board of directors decided to dispose of 15% (101,815,859 shares) of the company's holdings in the Indian subsidiary.

The listing of LG Electronics' Indian subsidiary will be a secondary offering, selling 15% of existing shares without issuing new shares. The entire proceeds will be transferred to the headquarters. This allows for large-scale cash inflow without financial risks such as interest expenses, which is expected to significantly improve the company's financial soundness.

The industry is also paying close attention to how LG Electronics will utilize the trillions of won in funds that will flow in at once through the initial public offering (IPO). It is widely believed that the company will use the funds to secure investment capacity for future growth, such as equity investments and mergers and acquisitions (M&A).

As LG Electronics has recently been restructuring its portfolio to focus on qualitative growth areas such as business-to-business (B2B) operations under a strategy of selection and concentration, it is expected to accelerate future growth and strengthen fundamental competitiveness by investing in promising sectors with the goal of achieving competitive advantage in five to ten years. In addition, part of the secured funds is likely to be used to enhance shareholder value.

LG Electronics has continuously expanded its influence in the Indian home appliance market. Since entering the Indian market in 1997, the company has established a thorough, locally-completed business system across the country over the past 28 years. Currently, LG Electronics operates two production bases, 51 regional offices, and over 780 brand shops in India. In the southern region of Sri City, the company is building its third production base, following the existing plants in Noida and Pune.

The Indian home appliance market is regarded as a high-growth area, driven by a population of 1.4 billion and a high economic growth rate. Analysts also point out that the low penetration rate of home appliances presents enormous growth potential. The penetration rates for major appliances are estimated to be 40% for refrigerators, 20% for washing machines, and 10% for air conditioners.

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