LG Electronics weighs India IPO to help chase $75-billion goal

Chief Executive Officer William Cho said an Indian market debut is one of several options it’s weighing to revitalize a decades-old consumer electronics business. Bloomberg

LG Electronics Inc. is considering an initial public offering for its India business, tapping a booming stock market to help hit a target of $75 billion in electronics revenue by 2030, Bloomberg reported.

Chief Executive Officer William Cho said an Indian market debut is one of several options it’s weighing to revitalize a decades-old consumer electronics business. It’s the first time the South Korean company, which competes head-on with larger rival Samsung Electronics Co., has spoken publicly about an Indian debut, the subject of persistent market and media speculation.

On May 28, Moneycontrol was the first to report that LG Electronics Inc has hired advisors, namely JP Morgan and Morgan Stanley, to evaluate a potential initial public offering of its unit LG Electronics India Pvt Ltd on local bourses.

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Cho — who ascended to the top post in 2021 after more than three decades with the flagship of the family-owned LG Group — has set a goal of growing the electronics business to an annual revenue of 100 trillion won ($75 billion) by 2030. That’s versus overall company revenue of about $65 billion in 2023. It aims to get there in part by earning more from enterprise clients — targeting about 45% of sales from other companies by the end of the decade, versus 35% now.

LG Electronics CEO William Cho

“It is one of many options we can consider,” Cho told Bloomberg Television. “I understand there’s increased interest among global investors,” he said, referring to a potential IPO in India. “As of now, nothing is confirmed.”

In India, LG seeks to sustain rapid growth. In the first six months of this year, revenue at LG’s unit within the Asian country rose 14% to a record 2.87 trillion won, while net income climbed 27% to 198.2 billion won.

Any IPO would coincide with a boom in India’s capital markets. Some 189 companies aim to sell shares to raise $5.6 billion this year, making it one of the busiest markets in this space. At least 30 IPOs joined the pipeline as demand powered by domestic money pushes companies to explore listings. Korean peer Hyundai Motor Co. is preparing to raise as much as $3.5 billion in an Indian IPO, Bloomberg News reported this month.

“We have been watching carefully what’s going on in the Indian market in terms of IPOs and following similar industry and similar IPO cases,” Cho said. LG hasn’t yet calculated possible valuations for its Indian unit, he added.

Cho, 61, plans to nurture new businesses that can each bring in more than 1 trillion won of annual revenue. Among them is heating, ventilation and air-conditioning, for which the company has 11 production sites globally. Chillers — large air conditioners for buildings — have become key for artificial intelligence data centers, which are sprouting up across the world as companies pursue generative AI. Over the past three years, overseas sales of LG’s chillers have grown 40% annually, on average.

LG is also expanding its subscription service for home appliances. In Korea, consumers can rent products such as washing machines and laptops ranging from three to six years by paying a monthly fee. In theory, that improves affordability and convenience: Some 35% of consumers are now opting for subscriptions, Cho said. The company recently began offering subscriptions in Malaysia and plans to roll that model out to customers in Thailand, Taiwan and India starting this year, and potentially the US and Europe in the future. LG expects revenue from the subscription business to grow 60% to about $1.3 billion in 2024.

The company’s also planning to expand its free ad-supported streaming services. Cho said LG will invest 1 trillion won by 2027 to grow its webOS-based advertising and content business.

“Half of my career was spent outside Korea, and it is about understanding customers and creating new business models for them,” said Cho, who has worked with LG in North America, Germany and Australia.