LG Electronics is evaluating a potential initial public offering (IPO) for its Indian subsidiary, LG Electronics India Pvt Ltd, on local stock exchanges. The company has engaged advisors to explore this possibility, according to three individuals familiar with the matter.
A definitive decision on the IPO has yet to be made by LG Electronics, and the ongoing discussions may or may not result in a public listing, the sources said on condition of anonymity. Investment banks JP Morgan and Morgan Stanley have been retained as advisors to assess the feasibility of the share sale, one of the sources confirmed. “A feasibility survey will be conducted before a decision is made on whether to proceed or not,” the person stated.
The second source also confirmed the hiring of advisors and emphasized the exploratory nature of these discussions. “These discussions are exploratory in nature, and the IPO plans could be dropped if the parent is not convinced,” the individual added.
A third source mentioned the attractive valuation multiples in India as a factor encouraging South Korean conglomerates 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,” this source noted.
Responding to queries regarding the potential listing, an LG Electronics Inc. spokesperson stated, “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.” The Indian subsidiary recently celebrated 27 years in the domestic market.
Representatives for JP Morgan and Morgan Stanley could not be immediately reached for comments. Email queries have been sent to both firms, and this article will be updated upon receipt of their responses.
In a related development, another South Korean multinational corporation is advancing its plans to list its Indian operations. On May 24, Moneycontrol reported that Hyundai had finalized its syndicate of advisors for a significant IPO, aiming to raise between $2.5 billion to $3 billion at a valuation of around $20 billion. The report indicated that the IPO would likely be an offer for sale, with the filing of draft papers expected by June or July.
LG Electronics India: Key Financial Metrics and Emerging Market Focus
In FY23, LG Electronics India, which sells refrigerators, air-conditioners, washing machines, and televisions, among other products, reported a 17 percent increase in total income to Rs 20,111 crore. Profit after tax grew by 14 percent to Rs 1,345 crore.
In January, LG Electronics Inc. reiterated its commitment to emerging markets, stating, “In this year, the company will concentrate its capabilities on breaking through limits to maximize 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.” As the discussions unfold, market participants will be closely watching for any further developments regarding LG Electronics India’s potential IPO.