Battery manufacturer becomes South Korea’s third most valuable company after Samsung Electronics and SK Hynix.
LG Energy Solution Ltd (LGES) jumped into its trading debut on Thursday after South Korea’s largest initial public offering (IPO) ever won bids worth 15.2 quadrillion won ($ 13 trillion), making it the country’s second most valuable company make.
LGES shares opened at 597,000 won ($ 496) against an IPO price of 300,000 won ($ 249). But the stock fell as much as 25 percent in early trading.
LGES became South Korea’s second most valuable company after Samsung Electronics Co Ltd with a market valuation that reached more than 105.3 trillion ($ 87.62 billion), even at the lowest intra-day trading level.
Founded by LG Chem Ltd, the firm recommends more than 20 percent of the global battery market for electric vehicles (EV).. It supplies, among others, Tesla Inc, General Motors Co and Volkswagen AG.
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’s quite difficult to predict LGES ‘first-day trading performance, mainly due to the market’s recent volatility caused by various factors such as investor concerns about the Federal Reserve and how fast it will move,” says Park Jung- hoon, fund manager. by HDC Asset Management in Seoul.
Competition from China
More than 4.4 million retail investors have bid a record 114 trillion won ($ 95 billion) to subscribe for shares in the IPO, Asia’s largest equity fundraiser since China’s Alibaba Group Holding Ltd $ 12.9 billion in its Hong Kong secondary listing collected in 2019.
Nearly 2,000 foreign and domestic institutional investors submitted bids worth about 15.2 quadrillion won ($ 13 trillion).
More than 20 companies launched on South Korea’s main board last year, raising about 17 billion won ($ 14 billion), almost double the previous record of 8.8 billion won ($ 7.5 billion) raised in 2010, according to the exchange operator Korea Exchange.
LGES ‘market value is dwarfed by the $ 208 billion from major Chinese rival Contemporary Amperex Technology Co. Ltd (CATL). However, LG CEO Kwon Young-soo pointed to a backlog of 260 trillion won ($ 216 billion) battery orders to highlight the company’s growth potential.
Analysts warn LGES is likely to face increasing competition as Chinese counterparts expand into the world market and more carmakers seek to develop their own EV battery technology.