LG Electronics India, the domestic arm of the South Korean electronics and consumer durables major LG Electronics Inc, on Friday filed the draft red herring prospectus (DRHP) for its initial public offering (IPO). Though it did not mention the issue size, industry sources said it is likely to be over Rs 15,000 crore.
LG will be the second Korean major after Hyundai Motor India to be listed in India. At this size, it will be the fourth-largest IPO in the country after Hyundai Motor (Rs 27,870 crore), LIC (Rs 21,008 crore) and Paytm (Rs 18,300 crore).
The IPO will be entirely an offer for sale (OFS) of 101.8 million equity shares by the parent firm with face value of Rs 10 each, with no fresh issue component, according to the DRHP.
Post-offer, the shareholding of parent firm LG Electronics will be diluted by 15% to 576.9 million shares.
The document shows Morgan Stanley, JPMorgan, Axis Capital, BofA Securities and Citi to be the lead managers of the issue.
“Our company expects that listing of the equity shares will enhance our visibility and brand image and provide liquidity and a public market for the equity shares in India,” the company said in the papers.
The prospectus projects the country’s appliances and electronics market to reach Rs 10 lakh crore (around $120 billion) by 2028, driven by various growth tailwinds. The last five years have seen the appliances and electronics market grow at around 7%, and this is expected to accelerate to around 12% in the next five years.
India’s rising disposable income, increasing urbanisation, and penetration of appliances in both urban and rural areas are among the key factors driving this growth potential.
LG Electronics India said it is the market leader across various product categories such as washing machines, refrigerators, televisions, inverter ACs, and microwaves, with the offline channel contributing to around 80% of the market (excluding mobile phones) in India in value terms, as of June 2024.
For the quarter ended June 2024, LG Electronics India registered total revenue from operations at Rs 6408.8 crore, with more than three-fourth of it coming from the home appliance and air solutions division (78.97%). For FY24, the total revenue was Rs 21,352 crore.
Since 2022, LG India has been investing to enhancing its production facilities and upgrading equipment and manufacturing processes to improve efficiencies. “We expect to continue making investments to support our growth. We intend to construct a third manufacturing unit in Andhra Pradesh to expand our manufacturing capacity to address the potential growth in demand for products,” the DRHP said.