EV battery maker LG Energy debuts after $17.5 trillion IPO frenzy in South Korea

LG Energy Solution has become South Korea's second most-valuable company after Samsung Electronics. PHOTO: REUTERS

SEOUL (REUTERS) - Electric vehicle (EV) battery maker LG Energy Solution (LGES) jumped in its trading debut on Thursday (Jan 27) after South Korea's biggest-ever IPO attracted bids worth US$13 trillion (S$17.5 trillion).

LGES shares opened at 597,000 won versus an initial public offering (IPO) price of 300,000 won. But the shares fell as much as 25 per cent in early trading.

LGES has become South Korea's second-most valuable company after Samsung Electronics with a market valuation reaching over 105.3 trillion won (S$118 billion), even at the lowest intra-day trading level.

Spun out of LG Chem, the firm commands more than 20 per cent of the global EV battery market. It supplies Tesla, General Motors and Volkswagen, among others.

Its trading debut will set the tone for upcoming IPOs in South Korea as retail investors - known as "ants" - flock to the stock market with liquidity aided by the government's stimulus policy during the Covid-19 pandemic.

"It is quite tricky to predict LGES' first-day trading performance, mainly because of the market's recent volatility caused by various factors such as investor concerns over the Federal Reserve and how quickly it will move," said fund manager Park Jung-hoon from HDC Asset Management in Seoul.

More than 4.4 million retail investors bid a record 114 trillion won to subscribe to shares in the IPO, Asia's largest equity fund raising since China's Alibaba Group Holding raised US$12.9 billion in its Hong Kong secondary listing in 2019.

Nearly 2,000 foreign and domestic institutional investors lodged bids worth about US$12.8 trillion.

More than 20 companies went public on South Korea's mainboard last year, raising about 17 trillion won, nearly double the previous record of 8.8 trillion won raised in 2010, according to bourse operator Korea Exchange.

LGES' market value is dwarfed by the US$208 billion of bigger Chinese rival Contemporary Amperex Technology. However, LG chief executive Kwon Young-soo has pointed to a 260 trillion won battery order backlog to highlight the company's growth potential.

Analysts caution LGES will still likely face growing competition as Chinese peers expand into the global market and more automakers seek to develop their own EV battery technologies.

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