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LG Chem says IPO of new battery unit could take about a year

A logo of LG Chem Ltd. at its plant. (Yonhap) Sketched by the Pan Pacific Agency.

SEOUL, Sep 18, 2020, Yonhap. LG Chem Ltd., South Korea’s leading chemical company, said Friday that the initial public offering (IPO) of its planned spin-off battery business unit could take about a year as it seeks ways to strengthen its leading position in the market, Korea Bizwire reported.

LG Chem on Thursday decided to spin off its battery business to better cope with growing demand for electric vehicle (EV) batteries. The new entity — tentatively called LG Energy Solutions and to be wholly owned by LG Chem — is set to be launched on Dec. 1.

LG Chem Chief Financial Officer Cha Dong-seok said Thursday in a conference call for shareholders that the company will draw up the IPO plan for the new battery unit.

But he suggested that the new entity is likely to be listed on the stock market in late 2021 or early 2022, saying the process could take about a year even if it pushes for the plan right at this moment.

Cha hinted that about a 20-30 percent stake in the battery unit could be up for the IPO, emphasizing that LG Chem will still hold the dominant stake.

Following the spin-off announcement, investors of LG Chem worried that the decision could undermine the value of the company since the battery business has been considered the future growth engine for the chemical firm.

Shares in LG Chem were up 3.88 percent at 670,000 won as of 11:10 a.m., after plunging 6.11 percent on Thursday.

However, Cha refuted such concerns, saying that the battery business could grow further with the IPO and that will be reflected in the shareholder value of LG Chem.

He added that LG Chem will also strive to beef up its other businesses.

“It will be an opportunity to properly evaluate the value of the company since we will be able to focus on petrochemical, advanced materials and bio businesses,” he said.

“If necessary, we will also push for merger and acquisition deals and partnerships in those businesses to further raise the company value.”

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