The Offering
LG Electronics (066570.KS) offered 101.815 million shares of its Indian subsidiary to the Indian market in an IPO valued at ~$1.3 billion US, which turned out to be not only a feather in the company’s hat, but a windfall for those investors who participated in the offering. The deal was priced at the top of the projected range (₹1,140 per share or ~$12.95 US) and opened at ₹1,715 on the BSE and ₹1,710.10 on the NSE ($19.43 - $19.48), a roughly 50% gain over the offering price. It closed at ₹1,689.40 ($19.19 US) on the BSE and at ₹1,689.90 ($19.20 US) on the NSE.
The deal was oversubscribed (Institutional) by over 166 times and at the closing day 1 price the company was valued at ~$13.1 billion US, considerably above the market cap of LG Electronics itself. The Indian subsidiary has no debt and an ROE of 37% for its most recent fiscal and manufactures, (85% of its products are produced by the subsidiary in India), assembles and sells (~14.5 million units/year) appliances (Refrigerators, Washers, Microwave ovens, TVs, Monitors, laptops, A/C, HVAC, and commercial displays) and CE products. The capital raised will likely go toward LGE’s broad overall growth plan, although we expect more detail will come out during the company’s 3Q conference call later this month.
The deal was oversubscribed (Institutional) by over 166 times and at the closing day 1 price the company was valued at ~$13.1 billion US, considerably above the market cap of LG Electronics itself. The Indian subsidiary has no debt and an ROE of 37% for its most recent fiscal and manufactures, (85% of its products are produced by the subsidiary in India), assembles and sells (~14.5 million units/year) appliances (Refrigerators, Washers, Microwave ovens, TVs, Monitors, laptops, A/C, HVAC, and commercial displays) and CE products. The capital raised will likely go toward LGE’s broad overall growth plan, although we expect more detail will come out during the company’s 3Q conference call later this month.
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