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LG Energy Solution set to raise $10.7B in IPO

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LG Energy Solution is reportedly in the early stage of discussions with Honda to jointly set up a four trillion won ($3.36 billion) electric vehicle (EV) battery factory in the US. LG ENERGY SOLUTION

LG Energy Solution set to raise $10.7B in IPO

South Korean electric vehicle (EV) battery giant LG Energy Solution said on January 14 that heated institutional demand has set its initial public offering (IPO) price at the top end of its target range at 300,000 won ($252).

In a regulatory filing, the firm said as many as 1,988 institutions have subscribed to its offering of 41.5 million initial issues. The shares were oversubscribed by more than 2,023 times, with all of the investors proposing to buy at the highest price range.

“LG Energy Solution attracted 15.2 quadrillion won in demand from institutional investors. This is Korea’s first IPO that drew a double-digit quadrillion won figure in demand,” a company official said.

By offering shares at 300,000 won apiece, LG Energy Solution will raise 12.75 trillion won ($10.7 billion) in what is likely to be the nation’s largest-ever stock debut later this month, and becoming the third-largest company in terms of market cap (70.2 trillion won), after Samsung Electronics and SK hynix.

Retail investors can make bids for the shares on January 18-19.

LG Energy Solution is also in talks with Japanese automaker Honda to form a joint venture in the US in a rare partnership between Korean and Japanese companies, according to industry sources on January 14.

The two companies are reportedly in the early stage of discussions to set up a four trillion won EV battery factory in the US with an annual production capacity of 40 gigawatt-hours, which is enough to power 600,000 EVs.

Details such as establishment date, location and ownership structure haven’t been decided yet but are expected to be ironed out in six months, sources said.

“Nothing has been decided yet,” a company official said, adding that the firm “has continued talks with various global automakers for possible partnerships”.

Honda’s partnership with LG Energy Solution comes as the world’s eighth-largest carmaker is gearing up for its entry to the burgeoning US EV market. Last year, Honda laid out a plan to transition 100 per cent to EVs by 2040, becoming the first Japanese carmaker to seek full electrification.

As to why Honda chose LG Energy Solution over Japanese battery manufacturers such as Panasonic, sources said that Japanese companies seem to be losing competitiveness against Korean firms.

There are existing ties between the two companies. Honda plans to manufacture EVs based on General Motors’ “Ultium” platform that was developed in partnership with LG Energy Solution.



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