LG Electronics India Pvt., wholly owned by LG Electronics Inc., has embarked on the process of going public to raise up to 2.6 trillion won ($1.8 billion) as it is seeking to sustain its rapid growth there through facility expansion and mergers and acquisitions.
The Indian unit filed a preliminary prospectus of its initial public offering, or a draft red herring prospectus (DRHP), with the Securities and Exchange Board of India on Dec. 6. It usually takes about three months to complete a review of an IPO application.
Once getting the nod from the securities authority, the Indian arm is expected to list on its local stock exchange in the first half of 2025.
In the IPO, LG Electronics will float 15% of shares in its wholly-owned unit, in addition to new share issues.
Investment banking sources expect the home appliance giant to raise up to 18 trillion won in the IPO at a valuation of around $13 billion.
LG Electronics India plans to use the proceeds to bolster its research and development and production capacity, as well as to purchase sizeable companies to make India as its major export hub, said LG officials.
It is building its third plant in India after one each in New Delhi and Noida, about 20 kilometers southeast of the capital city of India.
If it makes a trading debut in India, it will become a second South Korean company to float on its stock market. In October, Hyundai Motor India raised $3.3 billion in India’s largest IPO and the carmaker’s first offshore stock market listing.
The Indian arm posted its largest-ever half-year revenue of 2.09 trillion won in the first half of this year thanks to explosive home appliance demand. The figure almost matched the 2.2 trillion won in sales the Indian unit recorded for the whole year of 2020.
Its net profit in the January-June period this year soared 27% to 198.0 billion won, compared with the year prior.
LG pins high hopes on the world’s most populous country, where the home appliance penetration rate in 2023 for refrigerators, washing machines and air conditioners stood at 38%, 17% and 8%, respectively, far below that of China.
The increase in working women and nuclear families added to the bright outlook for India’s home electronics market.
The Korea Trade-Investment Promotion Agency forecast India’s home appliance market to expand to $21 billion in 2025 from $11 billion on 2018.
The flood of capital into Indian stock market is expected to facilitate its offering.
Cho Joo-wan, chief executive of LG Electronics who will stay on as CEO next year. In a recent interview with Bloomberg, he said the company retains its top spot in India’s home appliance market and he is optimistic for its growth potential there.
By Chae-Yeon Kim
why29@hankyung.com
Yeonhee Kim edited this article.
