LG Energy Solution, IPO This Year in Doubt?

[Asia Economy Reporter Park So-yeon] The highly anticipated "mega IPO" LG Energy Solution's listing within this year has become uncertain. Initially planned to complete the listing process in the third quarter of this year, the IPO schedule is now widely expected to be postponed to next year or later due to the General Motors (GM) electric vehicle recall incident. With approximately KRW 36 trillion worth of new battery investments needed by 2025, securing funds has also turned red.

According to the financial investment industry on the 23rd, as the October deadline for LG Energy Solution to decide and announce whether it will list within this year approaches, many forecasts suggest that a listing within this year will be difficult. A senior official from LG Energy Solution’s lead underwriter said, "Considering the scale of LG Energy Solution, a provision of up to KRW 2 trillion is not really a problem," adding, "However, to gain investors' trust, identifying the cause of the GM recall incident must come first." This is because investors can only be persuaded once the exact cause of the electric vehicle fires is determined. If the fires are concluded to be due to battery defects, other automakers may also join the recall wave, which is expected to affect the timing of the listing and the offering price. The official said, "It is difficult to disclose a specific listing date, but all possibilities, including postponing to next year, are being considered."

Within the battery industry, there is also analysis that a listing within this year will be difficult, as the amount of compensation to be paid to GM has not yet been finalized, and LG must decide its internal share of the burden, leaving many unresolved issues. A battery industry official said, "Since the cause of the GM recall has not yet been identified, an IPO this year seems unlikely," adding, "To secure a leading position in the global battery market, large-scale funding and active new investments are urgently needed, but relying solely on the IPO has caused financing schedules to become tangled, causing headaches."

LG Energy Solution plans to first secure urgent funds through joint venture establishment and order expansion. Recently, LG Energy Solution reportedly secured a large-scale battery supply contract from Stellantis, a global automaker group producing Maserati, Peugeot, and others. Meanwhile, LG Energy Solution reflected a recall provision of KRW 91 billion in its second-quarter earnings, and it is highly likely that additional recall costs will be applied as provisions in the third quarter as well.