LG Electronics Inc. has moved ahead with the long-delayed initial public offering of its wholly-owned Indian subsidiary, aiming to complete the process as early as next month after shelving the deal earlier this year.
The South Korean electronics giant’s board of directors on Tuesday approved a plan to sell a 15% stake, or 101,815,859 shares, in LG Electronics India Pvt., the company said in a regulatory filing.
The company will submit a final prospectus to the Securities and Exchange Board of India (SEBI), the South Asian country’s capital market regulator, by October.
The offering will consist entirely of existing shares, leaving the Korean parent with an 85% stake in its Indian arm.
LG Electronics has yet to disclose the price band or listing date, pending SEBI approval of the final prospectus.
LG Electronics got a nod for its preliminary IPO plan for the Indian unit from the Indian regulator in mid-March and had targeted an early May debut to raise about $1.5 billion.
But the company halted the process in April, citing global market volatility fueled by US tariff concerns. At the time, an LG Electronics official said the company would decide on the timing of the deal based on market conditions.
GREATER FINANCIAL SOUNDNESS
Analysts say the IPO would provide the parent company with significant cash inflows at no balance-sheet cost, since the shares are being sold by the Korean parent rather than newly issued.
LG Electronics held 1.1 trillion won ($783 million) in cash and cash equivalents as of the second quarter.
Indian local media estimate the offering could raise about 115 billion rupees ($1.3 billion).
“The fourth quarter is typically a slow season for LG’s business, but the Indian unit’s IPO should meaningfully improve cash flow,” IBK Securities analysts Kim Un-ho and Kang Min-gu said in a recent note.
Moody’s Ratings in February also flagged the IPO as a potential boost to the company’s financial strength.
LG Electronics India, the country’s No. 1 home-appliance brand, is valued at about $13 billion, exceeding the market capitalization of its Korean parent, which stood at 12.3 trillion won in Seoul.
The listing comes as the Korean electronics company seeks to expand its overseas manufacturing base in South Asia as an alternative to China, amid escalating US-China trade tensions.
It broke ground on its third home appliance manufacturing plant in India with a $600 million investment in May.
If LG Electronics makes a trading debut in India, it will become the second Korean company to float on the South Asian country’s stock market.
Last October, Hyundai Motor India raised $3.3 billion in India’s largest IPO and the carmaker’s first offshore stock market listing.
By Sookyung Seo
skseo@hankyung.com
Jennifer Nicholson-Breen edited this article.
