Another South Korean Firm, LG Electronics, to Conduct IPO with Promoter Selling 15% Stake
India has become a hotspot for initial public offerings (IPOs) in recent years, with many companies using the primary market to raise funds for expansion and development. The trend of cross-border listings is also gaining momentum, with foreign firms opting to list their subsidiaries in India due to market resilience and attractive listing gains.
Following the success of Hyundai Motor India Ltd.’s mega IPO in October, LG Electronics has decided to follow suit. The Indian subsidiary of South Korea’s LG Electronics Inc., LG Electronics India Ltd., has filed draft papers with SEBI to launch its IPO. Similar to Hyundai’s offering, LG Electronics’ IPO will be an offer for sale (OFS) by the promoter, with no fresh issue component. This means that all proceeds from the IPO will go to the promoter.
According to the draft red herring prospectus (DRHP), LG Electronics Inc. will sell 10.18 crore equity shares of face value ₹10 each in its Indian arm, representing a 15% stake. Post-IPO, the promoter will retain an 85% stake in the Indian subsidiary, holding 57.69 crore shares. While the price band and total issue size have not been disclosed, reports suggest that LG Electronics aims to raise around ₹15,000 crore through the IPO.
LG Electronics is a major player in consumer electronics, home appliances, and mobile communications, competing with listed entities such as Havells, Voltas, Whirlpool, and Blue Star. The company also faces competition from Samsung and Sony in the Indian consumer appliance market.
In the financial year 2023-24, LG Electronics India reported a 12.35% year-on-year growth in profit to ₹1,511.1 crore, with revenue from operations rising by 7.48% to ₹21,352 crore. The operating profit, or EBITDA, stood at ₹2,224.87 crore with a margin of 10.42%. For the three months ended June 30, 2024, the company reported a profit of ₹679.65 crore and revenue of ₹6,408.8 crore, with home appliances and air solutions contributing around 79% of total revenue.
Established in 1997, LG Electronics India has been operating in the country for 27 years, leading in major home appliances and consumer electronics segments. The company has been a market leader for 13 consecutive years in value market share in the offline channel in India.
The appliances and electronics market in India has shown steady growth in recent years, with projections indicating further acceleration. Rising disposable incomes, urbanization, and increased appliance penetration are expected to drive growth in the sector. The industry is anticipated to reach ₹10.06 lakh crore by CY2028, growing at a CAGR of 12%. This growth will be supported by various factors such as government initiatives, shifting consumer preferences towards premium products, and expanding retail channels like e-commerce.
Overall, the decision of LG Electronics India Ltd. to launch its IPO reflects the positive sentiment surrounding the Indian market and the company’s confidence in its growth prospects within the country.
