LG Electronics Inc.’s Indian unit is poised to make history in India’s equity market, with its planned 1.8 trillion won ($1.3 billion) listing set to become one of the country’s most oversubscribed and closely watched initial public offerings in years.
The blockbuster IPO marks a milestone for the South Korean electronics giant, giving it fresh momentum to accelerate its search for new growth engines and reinforce its core businesses, a strategy aimed at helping it weather an uncertain global economy.
On Monday, LG Electronics sold its 15% stake, or 101,815,859 existing shares, in LG Electronics India Ltd. at a price band of 1,080 to 1,140 rupees per share.
At the top end, the sale could raise as much as 1.8 trillion won.
The shares are set to debut on the National Stock Exchange and Bombay Stock Exchange on Oct. 14.
The offering drew bids worth 4.43 trillion rupees ($49.9 billion) at the top end of its price band last week, making it the most heavily subscribed large Indian offering since Reliance Power’s 2008 debut, according to exchange data.
Investors placed orders for more than 3.8 billion shares, or 54 times the shares available, during the three-day public subscription period from Oct. 7 to 9, with the deal fully booked within hours of launch.
Institutional investors led the charge, subscribing more than 160 times their allotted quota, while non-institutional and retail investors subscribed 22 times and 3.5 times, respectively.
Before the sale opened to the public, LG sold $392 million in shares to anchor investors such as BlackRock and the sovereign wealth funds of Singapore and Norway, underscoring strong global confidence in the brand’s Indian business.
Analysts say the overwhelming response highlights both the strength of LG’s position in India, a key consumer electronics market.
FUTURE GROWTH DRIVERS
LG Electronics plans to use the proceeds from its Indian unit’s IPO to expand manufacturing facilities in India and accelerate its advance into Southeast Asia.
It is currently building its third home appliance manufacturing plant in India with a $600 million investment, expanding production in one of the world’s fastest-growing consumer markets.
The Korean home appliance giant also plans to channel part of the gains into new business areas identified as future growth drivers, such as artificial intelligence, robotics, vehicle electronics and heating, ventilation and air conditioning (HVAC).
The IPO momentum also coincides with signs of recovery in LG’s core operations.
The company said Monday that preliminary third-quarter operating profit rose 7.7% from the prior quarter to 688.9 billion won on a consolidated basis, beating market expectations of 600 billion won by about 10%.
Strong demand for its home appliance subscription services, a record quarterly profit in its vehicle electronics division and solid HVAC business helped offset weaker results in overall appliance and TV sales, it said.
The operating margin in the vehicle electronics division stood at 4.4% in the second quarter, but the order backlog reached approximately 100 trillion won, reflecting solid demand.
Consolidated revenue for the quarter climbed 5.5% on-quarter to 21.9 trillion won, though it slipped 1.4% from a year earlier. Compared to a year ago, the operating profit fell 8.4%.
LG said a recovery in performance across the board helped offset the one-off cost burden from its voluntary retirement program, extended beyond the TV unit to include home appliance and HVAC operations.
The improvement contrasts with a weak second quarter, when profit nearly halved due to sluggish appliance demand and higher logistics costs linked to US tariffs and intensifying competition from Chinese rivals.
Since then, LG has stepped up efforts to streamline loss-making operations and redirect capital toward higher-margin B2B and digital businesses.
The company will announce detailed earnings results for the third quarter on Oct. 31.
On Monday, LG Electronics shares rose 2.5% to end at 81,000 won in Seoul trading, outperforming the broader Kospi, which closed down 0.7% at 3,584.55.
By Chae-Yeon Kim
why29@hankyung.com
Sookyung Seo edited this article.
