This article was displayed on the ChosunBiz MoneyMove (MM) site at 3:16 p.m. on Jan. 26, 2026.
Private equity fund (PEF) managers that had bet hundreds of billions of won on an LS Group affiliate on the premise of a listing have hit snags in their exit strategies. LS Group has temporarily halted the initial public offering (IPO) of great-grandchild company Essex Solutions after a controversy over duplicate listings. Essex Solutions manufactures special winding (insulated copper wire) for electric vehicle motors and transformers.
Duplicate listings refer to corporations in a parent-subsidiary relationship being listed on the market at the same time. In the past, the main target was "listing after a physical division," in which a prime business unit was carved out, but recently, the dominant view is that even listing an acquired unlisted subsidiary separately harms shareholder value.
According to the investment banking (IB) industry on the 26th, LS Group pushed ahead with the listing along with the carrot of "priority allocation to parent company shareholders" despite opposition from minority shareholders, but reversed course and decided to withdraw the listing after the president voiced a negative view. President Lee Jae-myung was quoted as pointing to the LS case at a luncheon with lawmakers on the Democratic Party of Korea's KOSPI 5000 special committee on the 22nd, saying, "Are there still such cases?"
The Mirae Asset-KCGI consortium, which invested $200 million (about 290 billion won) in Essex Solutions' pre-IPO to secure 21% equity, appears to be the first to face a tough decision on the path forward. The industry assumes the investment terms likely included a clause guaranteeing recovery of the investment, but with the listing route to realizing revenue blocked, the expected return will likely have to be revised down.
Beyond Essex Solutions, LS Group attracted large-scale investments through high-quality unlisted affiliates. JKL Partners, which executed a large investment in copper smelter LS MnM, also finds itself in a difficult position. That is because the collapse of the Essex Solutions listing has clouded the listing outlook for LS MnM as well.
The predecessor of LS MnM was LS-Nikko Copper, a joint venture established by LS and Japan's JX Metals. In Sept. 2022, LS bought JX Metals' 49.9% equity for 933.1 billion won to make it a wholly owned subsidiary, and issued 470.6 billion won in exchangeable bonds (EB) to JKL Partners. At the end of 2024, JKL Partners converted the EB into shares and became the second-largest shareholder (equity stake 24.9%).
At the time of the investment, LS and JKL Partners reportedly signed a contract to complete the listing of LS MnM by Aug. 2027. The prevailing view in the industry is that even if the LS MnM listing falls through, JKL Partners will have secured rights to guaranteed revenue. However, this is likely a principal-protection-level rate of return, which will inevitably disappoint PEF managers.
An IB industry source said, "Among PEF managers that invest on the premise of a qualified IPO, none will be satisfied with the rate of return guaranteed by the company that raised the money," adding, "This is merely a minimum safety device, and an IPO exit is the top option." Another source said, "Since the president has delivered a strong, direct message, it will be difficult to relaunch a listing at least during the current presidential term," adding, "It will likely turn into a long game, or they will have to be satisfied with alternatives proposed by the company."
Beyond LS, many large corporations have been caught up in the duplicate listings controversy, creating tension across the PEF industry. Representative cases include KY PE, which invested in HD Hyundai Robotics, and EUM PE, Premier Partners, and Q Capital Partners, which invested in SK ecoplant. They, too, invested on the premise of a listing.
LS said, "We made this decision after listening to concerns about the listing push from internal and external stakeholders, including minority shareholders and investors, and to enhance shareholder protection and trust," adding, "We plan to reexamine new investment options with financial investors (FI) that participated in Essex Solutions' pre-IPO."