Record demand
South Korean electric vehicle battery maker LG Energy Solution’s W12.8trn (US$10.7bn at the time) IPO was the world’s largest in 2022, demonstrating the impressive depth of the country’s equity capital market.
The float is also the country’s largest ever, dwarfing Samsung Life Insurance’s W4.88trn IPO in 2010.
The deal drew huge investor interest, set a record for IPO subscriptions and traded strongly, encouraging many other South Korean companies such as SoftBank-backed car-sharing services provider Socar and lithium-ion batteries separator maker W-Scope Chungju Plant to accelerate their listing plans.
LGES, which was spun off from chemical giant LG Chem, originally planned to wrap up the IPO in 2021. However, the deal was delayed after General Motors recalled Chevrolet Bolt electric vehicles over a risk that a defect in LGES-manufactured batteries could cause fires.
The hiccup did not dent investors’ enthusiasm for leading new energy players. The strong early interest allowed LGES to adopt an unconventional listing timetable for a deal of such size, with pre-marketing conducted before the Christmas holidays and books opening on January 4.
About 2,000 institutional investors, including 452 foreign ones, bid for a record W15,200trn of shares. International orders amounted to over US$70bn, with demand coming from sovereign wealth funds, global long-only investors and hedge funds without any price sensitivity.
Overall, the institutional tranche was more than 2,000 times covered, the highest ever for a South Korea main board IPO.
Demand came from all over the world. About 61.3% of the shares in the international tranche were allocated to Asian investors, 15.2% to Europe and 23.5% to the US.
The enormous demand allowed the battery marker to price the offer of 42.5m shares (34m primary/8.5m secondary), or 18.2% of the enlarged share capital, at the top of the W257,000–W300,000 range. LG Chem was the selling shareholder.
The issue price implied a market capitalisation of W70.2trn, which was the largest among all KRX-listed companies at the time of the deal.
The shares soared 68% to close at W505,000 on their trading debut on January 27, after surging as much as 99%. Even though South Korea’s benchmark Kospi Composite Index fell about 25% in 2022, LGES went from strength to strength. Its shares touched an all-time high of W629,000 on November 11, 110% above the issue price.
KB Securities and Morgan Stanley were joint lead bookrunners. Bank of America, Citigroup, Daishin Securities, Goldman Sachs and Shinhan Investment were joint bookrunners.
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