Post IPO, LG Energy Makes Splashy Debut On Exchange, Stock Doubles

LG Energy Solution, whose IPO we had covered last week, has had a rocking start to its journey as a listed firm, with the stock doubling on its first day of trading on the Korean stock exchange. Seen in the context of weak global markets and the fears of a correction, the listing gains are a strong indicator of the huge investor appetite and expectations from the energy storage sector. Many experts have already been predicting that the EV transition might have been underestimated in the 3-5 year period, as short term supply disruptions have impacted sales in the past 12 months.

Shares in LG Energy Solutions had been sold at an IPO price of 300,000 won (around Rs 18,750) per share but surged to almost 600,000 won (Rs 37,000 plus) per share on opening day of trading before finally settling at 482,000 (Rs 30,140) by market close. That gives the firm a closing market cap of $19.15 billion. Not bad for a firm that was a spin off from parent LG Chem. The valuation also makes it the second largest firm by market cap in Korea behind the colossus Samsung Electronics.

LG Energy Solution trails global leader CATL from China in terms of manufacturing capacity and supply deals. It currently has supply arrangements with Tesla, Volkswagen, and Hyundai, among global auto majors.

The firm raised funds to expand capacity in the US in partnership with General Motors, with whom it has developed the Ultium brand of batteries jointly. The 50GWh of battery storage capacity will be the third such plant for LG Energy in the US.

The high IPO response (subscribed over 2000 times) and the subsequent listing pop has not just made quite a few millionnaires, but also set the ground for other battery makers to take a harder look at the market and their own ambitions. For instance, it might lead to many legacy battery firms just entering the market to hive off their EV battery divisions to better capture market demand and valuations.