LS ELECTRIC has selected a lead underwriter and started preparations for an initial public offering (IPO) following its acquisition of transformer manufacturer KOC Electric last year. Concerns have been raised in the securities sector regarding duplicate listings of LS Group affiliates, but there are also expectations that LS ELECTRIC and KOC Electric can create synergies in targeting the U.S. power equipment market.
According to the power equipment industry on the 17th, KOC Electric has selected NH Investment & Securities and Shinhan Investment Corp. as its lead underwriters, aiming for a listing next year. KOC Electric is reportedly considering a listing on the KOSDAQ market and is keeping open the possibility of going public in the following year, depending on the progress.
LS ELECTRIC became the largest shareholder by acquiring a 51% equity stake in KOC Electric for 59.2 billion won last April. The remaining 49% equity stake in KOC Electric is held by LB Private Equity.
KOC Electric produces ultra-high voltage transformers and special power equipment, such as transformers for ships. After being acquired by LS ELECTRIC, KOC Electric expanded its ultra-high voltage transformer factory in Ulsan in December, increasing its annual production capacity to over 100 billion won, more than tripling it. The production range of ultra-high voltage transformers was also expanded from 154 kilovolt (kV) to 230 kV. An LS ELECTRIC official noted, "KOC Electric plans to use the funds raised through the IPO to increase production capacity, enhance facility efficiency, and expand its portfolio."
LS ELECTRIC is currently constructing a new production building for ultra-high voltage transformers at its Busan plant. It has decided to invest 100.8 billion won in the new construction and expansion. When it is completed in September, LS ELECTRIC's production capacity for ultra-high voltage transformers is expected to double, reaching a scale of 500 billion won, including KOC Electric. Gu Ja-kyun, chairman of LS ELECTRIC, said on the 5th at the battery exhibition "InterBattery 2025" regarding the expansion of the ultra-high voltage transformer market, "Enhancing KOC's capabilities and expanding production is a priority."
LS ELECTRIC is expanding its business in the United States as demand for power and power equipment grows due to investments in artificial intelligence (AI) data centers by major U.S. technology corporations. The ultra-high voltage transformers and circuit breakers produced by LS ELECTRIC are essential for building transmission networks.
LS ELECTRIC completed an expansion after acquiring 100% of the equity in MCM Engineering II, a distribution board company in Utah, U.S., in 2022. In Texas, it is in the process of establishing facilities to produce distribution boards and circuit breakers by renovating a Samsung Electronics plant.
LS ELECTRIC supplies distribution boards and circuit breakers to xAI, an AI development company founded by Elon Musk, CEO of Tesla. As collaborations with major U.S. tech companies in the power sector are just beginning, projections suggest that LS ELECTRIC's presence will grow. The expansion of Korean companies' production bases in the U.S. is also why the revenue share of domestic power equipment companies, including LS ELECTRIC, is increasing.
The power equipment industry anticipates that LS ELECTRIC will be able to create synergies with KOC Electric in targeting the U.S. market. One official said, "If KOC Electric increases production capacity and lineup with the funds it raises from going public, LS ELECTRIC can utilize its sales network to diversify its revenue structure, which is mainly focused on the domestic market, into overseas markets."