LG Electronics India Ltd, the Indian subsidiary of South Korea’s LG Electronics Inc., has filed draft papers with the Securities and Exchange Board of India (SEBI) to launch an initial public offering (IPO). If successful, LG would become the second major Korean brand, after Hyundai, to list its local subsidiary on Indian stock exchanges.
Similar to Hyundai, LG’s IPO size is expected to be substantial. Reports indicate that the issue size could be approximately $1.8 billion (over Rs 15,000 crore). Currently, Hyundai holds the record for India’s largest IPO, followed by LIC, Paytm, and Coal India. With an issue size of Rs 15,000 crore, LG’s IPO would rank as the fifth largest in India’s history.
The public issue is going to be offered for sale (OFS) only and involves the sale of 10.18 crore equity shares by the promoter, LG Electronics Inc. As per the draft red herring prospectus (DRHP), the promoter will sell 10,18,15,859 equity shares of face value Rs 10 each through the OFS.
Post-IPO, the promoter's shareholding will come down by 15%, leaving LG Electronics Inc with 57.69 crore shares in the Indian subsidiary. Since the issue is completely an OFS, LG Electronics India will not receive any proceeds from the IPO. Hyundai’s IPO was also entirely an OFS.
In the filing, LG Electronics India stated that the listing aims to boost its visibility, enhance its brand image, and create liquidity for its shares in the public market.
LG Electronics India is a leading player in major home appliances and consumer electronics. The company products are sold to both B2C and B2B customers in India and internationally.
In the crowded Indian consumer appliance market, it competes against fellow Korean brand Samsung, Japan’s Sony and Tata Group’s Voltas. LG Electronics India had reported a 12.35% rise in profit to Rs 1,511.1 crore for FY24, and its revenue from operations grew 7.48% cent to Rs 21,352 crore.
The IPO will be managed by merchant bankers such as Morgan Stanley India, JP Morgan India, Axis Capital, BofA Securities India, and Citigroup Global Markets India.
A senior analyst at a leading brokerage firm said that big Korean firms are eyeing the Indian market owing to the premium valuation they receive for their subsidiary. “However, they should avoid going overboard when it comes to valuations and leave space for primary market investors,” the analysts said.