Battery giant LG Energy doubles as investors look to booming EV market

Korean battery maker LG Energy Solution has had an extraordinary listing on the Korean Stock Exchange, with the company’s shares almost doubling on their first day of official trading on Thursday.

Shares in the battery manufacturer were sold at an IPO price of 300,000 won (A$350) per share but surged to almost 600,000 won (A$700) per share on their first day of trading. Shares settled at 482,000 (A$565) by the day’s close.

It places the company at a valuation of around A$125 billion, making it South Korea’s second most valuable listed company, behind only Samsung electronics.

LG Energy Solution is a spin-off of the energy business of LG Chem – itself a subsidiary of the parent LG Corporation – and its astonishing start to trading marks the astronomical rise of the global market for battery storage devices and electric vehicles.

LG Energy Solution already controls around one-fifth of the global market for electric vehicle batteries, supplying batteries to Tesla, Volkswagen, and Hyundai.

LG Energy’s robust market listing has been a rare positive in global markets currently weathering a correction due to inflation concerns and the winding back of government stimulus measures.

Through the listing, the company sought to raise US$10 billion to fund the company’s ongoing expansion, improving product quality and further investment in the research and development of battery technologies.

LG Energy Solution CEO, Young-soo Kwon, said in a translated statement that the IPO represented the “starting point for the next 100 years.”

Expansion plans include a commitment to construct a $2.1 billion battery plant in the United States, in a partnership with General Motors, that was unveiled on Wednesday.

The factory will be located in Lansing, Michigan and will produce the Ultium brand batteries developed through the joint partnership with LG and GM.

It will become the company’s third battery cell manufacturing facility in the United States and is expected to have the capacity to produce of 50GWh of battery storage capacity annually once operational.

“With a shared vision, GM and LG Energy Solution pioneered the EV sector by seizing new opportunities in the market well before anyone else did,” Young-Soo Kwon said.

“Our third battery manufacturing plant, fittingly located in America’s automotive heartland, will serve as a gateway to charge thousands and later millions of EVs in the future.”

It was the second largest IPO in Asia, behind only the US$12.9 billion IPO for the Alibaba Group in 2019.

The company said the IPO was massively oversubscribed by hopeful investors, receiving more than 2,000 times the expected level of demand from local and international investors.

That demand flowed through into the first day of trading, as eager buyers pushed the price of shares higher.