이 기사는 2021년 06월 09일 07시54분 thebell에 표출된 기사입니다

LG Energy Solution (LGES), the electric vehicle battery manufacturing subsidiary of LG Chem, plans to file for a preliminary review for its initial public offering (IPO) this week, aiming to complete the IPO process by October.

The battery maker plans to submit its application for the preliminary review for its listing to the Korea Exchange this week, according to sources Monday. The company aims to list its shares within this year after completing the IPO process by October.

LGES is set to become this year’s IPO blockbuster with the company aiming to raise about 15 trillion won ($13.4 billion) at an estimated valuation of around 50 trillion won. LGES has hired KB Securities and Morgan Stanley as its lead underwriters for the process, with Shinhan Investment Corp, Daishin Securities, Citi Global Market Securities, Goldman Sachs, and Bank of America serving as joint underwriters.

The process is going smoothly as planned. LGES selected its lead underwriters in January and carried out an audit process. It normally takes four to five months from the due diligence process to the application for the preliminary review, but the company has accelerated the process to be listed on the Kospi within this year.

If LGES starts a book building process immediately after it gets a preliminary approval, it can complete the procedures by October.

LGES did not apply for a fast-track listing, which shortens the review timeline, because the split-off of LG Chem’s battery business couldn't meet all the requirements.

However, worries about LGES’ enterprise value linger amid risks surrounding the company.

Credit Suisse released a report last month on LG Chem, saying that discount should be applied to LG Chem due to the LGES’ planned IPO. The securities firm downgraded LG Chem’s outlook to “sell” and slashed the target price from 1,300,000 won to 680,000 won.

This has made the stock price of LG Chem plummet from over 900,000 won to 810,000 won. Market insiders concern that a drop in LG Chem’s enterprise value will have an impact on LGES ahead of its planned IPO.

LGES also announced last month a voluntary recall of its lithium-ion batteries used in energy storage systems due to potential fire risks. The recall is set to cost the company 400 billion won.

LGES’ clients including Volkswagen announcing that it would internalize battery production is considered another risk which may put pressure on the company’s valuation. (Reporting by Chan-mi Oh)