South Korea’s LG Electronics is reportedly planning to list its Indian subsidiary - LG Electronics India Ltd - on the domestic bourses at a hefty valuation of up to $15 billion.
The company, which is planning to launch a mega IPO in the first of the calendar year 2025, was earlier targeting a valuation of $13 billion.
Both valuations are higher than LG’s market capitalization on the South Korean exchanges. LG’s shares have fallen about 13% this year in Seoul and the company commands a market value of $10 billion.
A report by Bloomberg said that LG has been sounding out preliminary interest from potential investors and that deliberations are ongoing and details could change.
LG may ultimately seek a slightly lower valuation for the business based on final demand, the report citing sources said.
A senior analyst at a brokerage firm said that MNCs should not get too ambitious on the valuation front and leave room for investors. “Seeking a larger valuation for a subsidiary than the parent company gives out the wrong signal to investors,” the analyst said requesting anonymity.
LG Electronics India recently 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).
The public issue is going to be an offer 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.
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 firm 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.