이 기사는 2022년 02월 11일 08시04분 thebell에 표출된 기사입니다

LG Chem has revealed a plan to shift its focus away from its mainstay petrochemical business and toward secondary battery materials and life science, prompting speculation that the Seoul-based company may consider splitting off those businesses to create new subsidiaries.

In an earnings call on Tuesday, LG Chem said it would grow revenue of its secondary battery business more than twelvefold to 21 trillion won ($17.5 billion) by 2030, from 1.7 trillion won in 2021.

The company also announced a plan to become a global player in the pharmaceutical industry, with a target of increasing revenue of its life science unit to 1 trillion won by 2030.

In the past years, many large South Korean companies have opted to separate their high-growth business units into new entities in order to enhance management efficiency and remove a conglomerate discount.

Since 2000, four companies – LG Household & Healthcare, LG Life Sciences, LG Hausys and LG Energy Solution – have been hived off from LG Chem.

Especially, LG Energy Solution, formerly LG Chem’s electric vehicle battery unit, was split off in December 2020 and raised 12.8 trillion won in the nation’s largest-ever initial public offering last month.

A listed company’s split-off of its high-growth unit and a subsequent IPO, however, has raised eyebrows with shareholders because this, in most cases, led to a sharp decline in the parent company’s market value.

Shin Hak-cheol, LG Chem’s chief executive and vice chairman, dismissed investor concerns about a potential split-off of its secondary battery materials and biotech businesses, saying that they are different from the case of LG Energy Solution.

“Expanding battery production capacity requires billions of dollars of investment a year, and a public listing was our only option to raise capital to meet the investment needs,” Shin said during the earnings call.

“But in case of the secondary battery materials and biotech units, we can fully cover the investment needs with the company’s ability to raise funds,” he added.

However, industry experts say, from a longer-term perspective, it is still possible that the two businesses could be separated from LG Chem, especially given that the company’s all business units operate independently with each other.

“Splitting off the units is unlikely to be off the table because that’s a good way to enhance management efficiency and would help the company focus on the highest growth areas,” an industry insider said.

Similarly, SK Innovation has separated its fast-growing business units in recent years, acting as a holding company for subsidiaries like SK Energy, SK Geo Centric, SK IE Technology, SK Lubricants and SK Earthon. It recently started the battery recycling business. (Reporting by Eun-a Jo)