LG Electronics India eyes IPO after Hyundai’s move; no final decision yet

Investment banks JP Morgan and Morgan Stanley have been hired as advisors to work with LG Electronics to explore the share sale, one of the people said.

South Korea’s LG Electronics has hired advisors to evaluate a potential initial public offering of its unit LG Electronics India Pvt Ltd on local bourses, three people familiar with the matter said.

A final call on the proposed value-unlocking exercise has not been taken by the South Korean giant, and the current discussions may or may not result in an eventual listing, the people said, requesting anonymity.

Investment banks JP Morgan and Morgan Stanley have been hired as advisors to work with LG Electronics to explore the share sale, one of the people said. “A feasibility survey will be conducted before a decision is made on whether to proceed or not,” the person said.

A second person also confirmed the hiring of the advisors. “These discussions are exploratory in nature, and the IPO plans could be dropped if the parent is not convinced," the person said.

“Multiples in India are attractive, and South Korean conglomerates are encouraged to monetize their investments globally. These are early days, and the transaction will not happen in a hurry, but if it gets the green signal, then LG Electronics India could look at raising upwards of $500 million,” a third person familiar with the deal said.

In response to an emailed query on the Indian arm’s listing plans, a spokesperson for LG Electronics Inc. said, “In India, LG Electronics has firmly established itself as a highly reliable brand, leading to sustained market growth. We are also market leaders in most categories. We believe that recent speculations stem from the high expectations the market holds for LG Electronics in India.”

Incidentally, the Indian arm recently marked 27 years in the domestic market.

Spokespeople for JP Morgan and Morgan Stanley couldn’t be reached immediately for comments. Email queries have been sent to both firms, and this article will be updated as soon as we hear from them.

Another South Korean MNC is looking to list its Indian operations, and its plans are more advanced.

On May 24, Moneycontrol reported auto major Hyundai had finalised its syndicate of advisors for a mega IPO, looking to raise between $2.5 billion to $3 billion at a valuation of around $20 billion. The report added that the issue was likely to consist purely of an offer for sale, and the filing of draft papers was expected by June-July.

LG India: The Stats That Matter and The EM Strategy

In FY23, the total income of LG Electronics India, which sells fridges, air-conditioners, washing machines and television sets, among other products, grew 17 percent to Rs 20,111 crore. Profit after tax increased by 14 percent to Rs 1,345 crore.

An Economic Times report citing LG Electronics India’s regulatory filings with the Registrar of Companies said that refrigerators contributed 29% of sales in FY23, followed by washing machines at 21%, air conditioners at 20%, and televisions at 19%. The home appliances segment generated more than ₹14,000 crore in sales for the company, the November 2023 report said.

In January, LG Electronics Inc. highlighted its commitment to emerging markets, stating, “In this year, the company will concentrate its capabilities on breaking through limits to maximise its business potential. Guided by the newly established Overseas Sales & Marketing Company, LG will strive for additional growth and expanded product coverage, particularly in emerging markets where there are greater growth opportunities.”