South Korean home appliances giant LG Electronics is aiming to cement its presence in India, going for an initial public offering in the country, where the firm is a leader in the premium TV and air conditioner market.
On Friday, the company’s Indian arm filed for an IPO with the Securities and Exchange Board of India, a draft red herring prospectus from the company showed.
LG Electronics, the parent company that fully owns the Indian entity, will sell 101.8 million shares, accounting for about 15 percent of its shares, according to the draft IPO papers.
From the IPO, LG Electronics is expected to raise approximately $1.8 billion, which would make the Indian affiliate one of the top five largest IPOs in the country's history. The Indian affiliate is projected to achieve a valuation of about $13 billion.
“In India, LG has been operating for a long time. Now we are reviewing a range of options to become a ‘national brand’ in the country," LG Electronics CEO Cho Joo-wan had said in September. The CEO had also said going public in the Indian market was a "plausible" option the company was reviewing.
The Indian regulator's review of the filed documents is expected to take about three months. If the evaluation process goes smoothly, the company will be able to verify the level of demand, designate the initial offering price and date, and seek approval for a final red herring prospectus. The IPO process is expected to be completed as early as the first half of next year.
LG Electronics plans to utilize the fund not only in the Indian market, but also for future investment, possibly in merger and acquisition deals and research and development.
LG Electronics established its first headquarters in Noida, India in 1997 and has since been expanding its facilities to complete a local supply chain, with sales, production and research and development centers.
The company has become a popular premium home appliance brand in the country, especially in the TV and air conditioner markets. The company was the top seller in key home appliance segments, including refrigerators, washing machines and air conditioners. LG also ranked No. 1 in India's market for organic light-emitting diodes, taking 64 percent share, according to market tracker Omdia.
Last year, LG's Indian headquarters posted revenue of 3.39 trillion won ($2.3 billion), growing a whopping 33.6 percent compared to 2.47 trillion won in 2018. This year, the company's annual sales are expected to surpass that of last year, given that sales in the first three quarters had already reached 3.07 trillion won.
Amid surging demand, LG is preparing to build its third manufacturing facility in the Asian country. The company already operates two production facilities, one in Noida and another in Pune.
India, with a population of 1.4 billion, has relatively low penetration rates of refrigerators, washing machines and air conditioners, but the figures are growing. According to the Korea Trade-Investment Promotion Agency, India's home appliances market was valued at $11 billion in 2018, and is expected to double next year.
Earlier in October, Hyundai Motor India launched the largest IPO in the country's history and also became the first Korean overseas subsidiary to tap into the Indian stock market.
