LG Electronics convened its board of directors and decided to sell 15% of the equity in its India subsidiary through a secondary offering. Following the board resolution, LG Electronics plans to submit the final securities registration statement to the Securities and Exchange Board of India (SEBI), and the initial public offering (IPO) process is expected to be completed as early as next month.
LG Electronics disclosed that on the 30th it convened its board of directors and decided to sell 15% of the equity in its India subsidiary (101,815,859 shares). The disposal date and amount have not been determined. LG Electronics plans to re-disclose the price band for the public offering and the scheduled disposal date after final approval from the Securities and Exchange Board of India.
Earlier, LG Electronics submitted its preliminary listing review documents in December last year, ramping up preparations for listing, and received preliminary approval for listing from the Securities and Exchange Board of India in March this year. Although there had been expectations that the listing could proceed as early as the first half, the company exercised caution with the schedule in light of volatility in global markets, including the Indian stock market, at the end of April.
The listing of LG Electronics' India subsidiary will be a secondary offering that sells 15% equity without issuing new shares, with 100% of the proceeds flowing to the headquarters. It enables large-scale cash raising without financial risks such as interest costs, allowing for a significant improvement in financial soundness. The offering size expected by local media recently is around 115 billion rupees (approximately 1.8 trillion won), which far exceeds LG Electronics' 1.1 trillion won in cash and cash equivalents on a separate basis at the end of the second quarter.
IBK Securities researchers Kim Un-ho and Kang Min-gu said in a corporations analysis report published on 18th, "The fourth quarter is a slow season, but cash flow is expected to improve significantly with the India subsidiary's listing." Earlier in February, the international credit rating agency Moody's also noted, "The forthcoming IPO of LG Electronics' India subsidiary will further strengthen the company's financial metrics."
Meanwhile, more global corporations are leveraging the unique characteristics of India's capital markets to raise funds and accelerate their local businesses. Whirlpool (home appliances), Oracle (IT), Moody's (credit ratings), Suzuki Motor (automobiles), and Nestlé (food) have listed subsidiaries in India.