LG CNS Launches IPO... Lowest Proportion of Internal Transactions Compared to Peer Companies

Entering IPO Procedures Targeted for First Half of Next Year
Internal Transaction Ratio at 59.8%, Lowest in Industry

As LG CNS officially embarks on its initial public offering (IPO) process, attention from the securities industry is intensifying. In particular, the company is drawing focus for having the lowest proportion of internal transactions compared to peer companies.

On the 4th, LG CNS submitted its "Preliminary Review Application for Listing" to the Korea Exchange for listing on the KOSPI market. After approval from the Korea Exchange, the company plans to proceed with related procedures such as submitting a securities registration statement, conducting demand forecasting and finalizing the public offering price, and subscription, aiming for a KOSPI listing in the first half of 2025.

The market highly values LG CNS's growth potential. LG CNS is expanding its business from traditional IT service sectors such as system integration (SI) and system management (SM) into digital transformation (DX) areas including artificial intelligence (AI), cloud, and smart factories.

Based on its AI technology and business capabilities, LG CNS is delivering results. While currently engaged in building AI digital textbook learning data, the company is actively advancing generative AI businesses in manufacturing, finance, and public sectors, including △image generation AI services dedicated to manufacturing companies △chatbot services for commercial bank customer consultations △government-exclusive administrative support generative AI services.

LG CNS plans to innovate customer value by enabling clients to lead generative AI innovation-driven businesses centered around its AI Center and Gen AI Studio. In the cloud domain, LG CNS is leading the application modernization (AM) and managed service provider (MSP) markets.

Additionally, LG CNS is collaborating with global cloud service providers (CSPs) such as AWS and Microsoft to actively advance cloud-based generative AI businesses, thereby transforming customer experiences. Regarding smart factories, the company is pursuing △expansion of smart factory construction domestically and internationally △enhancement of productivity and quality through big data and AI analytics △advancement of virtual factories by integrating IT and equipment.

Based on these DX technological capabilities, LG CNS’s performance is also trending upward. Last year, sales reached KRW 5.6053 trillion and operating profit was KRW 464 billion, representing increases of 12.8% and 20.4%, respectively, compared to 2022.

Some voices suggest that LG CNS should reduce the proportion of internal transactions to ensure a successful IPO. Based on last year’s sales, LG CNS’s internal transactions (transactions with related parties) accounted for 59.8%. This is the lowest level in the industry compared to peer companies currently listed on the stock market, such as Hyundai AutoEver (91.2%), POSCO DX (90.4%), and Lotte Innovate (66.3%).

Interest is also growing regarding the selection of LG CNS’s peer group. According to industry sources, LG CNS is expected to include not only domestic but also global IT service companies in its peer group, based on its recent focus on DX and cloud businesses. Leading domestic candidates for the peer group include Samsung SDS, POSCO DX, and Hyundai AutoEver. Overseas companies considered include Accenture, India’s Tata Consultancy Services, and Infosys. All these companies provide IT services in the global market.

An LG CNS official stated, "Through the listing, we will enhance core competencies in DX areas such as AI, cloud, and smart factories to increase shareholder value and leap forward as a global DX specialist company."