Will the Listing Schedule Change... SK's Battery Spin-off Still a Distant Prospect

Battery Dispute Settlement and Aftermath
LG Energy Solution Shows More Flexibility in Settlement Payment

[Asia Economy Reporter Choi Dae-yeol] As LG Energy Solution and SK Innovation have agreed to end their battery dispute, attention is focused on whether this will affect the listing schedules each company is pursuing. LG Energy Solution, which was formerly a business division of LG Chem, spun off last December and is aiming for a listing within this year. SK Innovation has also been considering spinning off its battery business division for an initial public offering, both inside and outside the company.

According to LG Chem, as of last year, LG Energy Solution (LG Chem's battery business division) recorded sales of 12.3635 trillion KRW and an operating loss of 165.6 billion KRW. Initially, the division turned profitable from the second quarter of last year and posted annual profits, but it recorded a loss in February due to the full replacement cost of batteries for the Hyundai Kona electric vehicle (EV). LG had been proceeding with the listing process aiming for this year regardless of profit or loss, but concerns were raised that the listing schedule could be disrupted because loss-making companies must apply for special exceptions, making the process complicated. With the recent agreement to receive 500 billion KRW each in 2023 and 2024 from SK, the situation has become more manageable.

The plan for SK Innovation’s battery business spin-off and listing is still in the preliminary stage. Industry insiders believe that a physical spin-off, making it a subsidiary of SK Innovation, is the most likely option. SK Innovation operates as an intermediate holding company within the group with subsidiaries in refining and petrochemicals, while directly managing the battery business. The management is reviewing the option of separating the battery business to attract external funding through a separate listing. However, due to the agreement requiring SK to spend about 2 trillion KRW over the next 5 to 6 years, concerns have been raised that the listing schedule might face delays.