LG CNS plans to go public as early as 2023 Boosting EBITDA likely to be key to its valuation
Translated by Kim So-in 공개 2021-07-21 08:00:05
이 기사는 2021년 07월 21일 07:56 thebell 에 표출된 기사입니다.
South Korea’s LG CNS, an information and communications technology solutions affiliate of LG Group, has announced its initial public offering (IPO) plan.LG CNS has recently launched a task force dedicated to its listing, industry sources said Monday. The IPO timing hasn’t been finalized yet, an official at the company said.
LG Corp sold a 35% stake in LG CNS to Macquarie Korea Opportunities Investment (Macquarie PE) in 2019, reducing its stake to around 50% from nearly 85%.
The contract between LG Corp and Macquarie PE reportedly contained exit plans, including a listing of the company within five years or selling shares to other strategic investors. As the deal closed on April 29, 2020, Macquarie PE has until April 2025 to exit its investment in LG CNS. Industry sources said the company may go public as early as 2023.
Macquarie PE took over more than 30 million shares of LG CNS for around 1 trillion won ($868 million) or 32,828 won apiece. This translates into an equity value of 2.86 trillion won for a 100% stake as of April 2020. Macquarie PE will generate return only when the company is valued higher than this level when it goes public in the future.
LG CNS’ enterprise value/earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) was 9.95 times based on its EBITDA of 295.8 billion won and net borrowing of 79.8 billion won in 2019 on a consolidated basis. After Macquarie PE became the company’s major shareholder, LG CNS’ EBITDA grew to 327.1 billion won and revenue increased by 2.4% to 3.36 trillion won in 2020 year-on-year.
By applying the EV/EBITDA multiple, 100% of LG CNS in 2020 is estimated to be worth 3.45 trillion won. The company had negative net borrowing of 192.7 billion won at the end of last year on a consolidated basis. The company’s valuation is likely to increase if the current trend continues.
But LG CNS has to keep the system integration business’s EV/EBITDA at 9~10 times to boost its valuation. Its peer company Samsung SDS had an EV of 9.98 trillion won in 2020, with EBITDA of 1.32 trillion won. Samsung SDS’s EV/EBITDA multiple stood at 7.54 times, which is sharply lower than 21 times when it went public in 2014. According to the Korea Exchange, the information technology (IT) sector’s EV/EBITDA multiple stands at around 7.19 times.
When applying an EV/EBITDA of the IT sector, the value of 100% of LG CNS drops to 2.54 trillion won as of the end of 2020.
LG CNS needs to increase its EBITDA to be valued at 3 trillion won. The company’s main businesses include digital technology innovation, digital technology optimization, smart factory and city, data and analytics. LG CNS plans to grow its distribution center optimization solution business and IT new technology business, which the company views as its new growth engines.
LG CNS also needs to show its achievements in areas like smart cities, smart factories and renewable energy infrastructure. These are the specialized areas of Macquarie PE, which is working on integrating next generation technologies – such as AI, 5G and IoT – into its portfolio companies. (Reporting by Seul-gi Kim)
< 저작권자 ⓒ 자본시장 미디어 'thebell', 무단 전재, 재배포 및 AI학습 이용 금지 >
best clicks
최신뉴스 in 전체기사
-
- [2023 더벨 글로벌 투자 로드쇼-인도네시아]인니 정부, 친기업 정책 드라이브에 뜨거운 관심 '체감'
- [2023 더벨 글로벌 투자 로드쇼-인도네시아]"유망 스타트업 양성소, 글로벌 투자 거점 부상"
- [2023 더벨 글로벌 투자 로드쇼-인도네시아]"철저히 투자금융 관점서 봐야, 전략적 접근시 유리"
- [2023 더벨 글로벌 투자 로드쇼-베트남]신용보증기금, 중기 베트남 진출 지원에 팔 걷었다
- [2023 더벨 글로벌 투자 로드쇼-베트남]인프라·산업 투자 증가, 부동산 가격 상승 견인
- [2023 더벨 글로벌 투자 로드쇼-베트남]떠오르는 신규 투자처 '온실가스 감축 프로젝트'
- [2023 더벨 글로벌 투자 로드쇼-베트남]VITASK, 베트남 현지 기업 생산·기술력 개선 앞장
- [2023 더벨 글로벌 투자 로드쇼-베트남]급성장 '핀테크' 산업, 전자 결제·P2P·초단기 분야 각광
- [2023 더벨 글로벌 투자 로드쇼-베트남]진출 계획시 세무 접근 필요, '우대세율·감면' 활용해야 '득'
- [2023 더벨 글로벌 투자 로드쇼-베트남]한국이 투자 주춤할 때 태국은 과감히 '베팅'