LG Energy Solution plans to raise up to 12.75 trillion won ($10.8 billion) in South Korea’s largest ever IPO, ignoring concerns that its battery fires will cause a large-scale recall of Chevrolet Bolt electric vehicles.

The company said in a document on Tuesday that it will issue 34 million new shares at a price of 257,000 to 300,000 won per share. The parent company LG Chem Ltd. will sell 850,000 shares, bringing the total to 42.5 million shares. According to the IPO prospectus, retail and institutional investors can subscribe on January 18th and 19th, and 20% of it will be allocated to employees. Trading will begin on January 27.

This issuance may bring LG Energy's market value to 70 trillion won ($59 billion). 

LG Energy, the world's second-largest battery manufacturer, replaced its CEO in October and allocated US$918 million to cover the cost of recalling more than 100,000 General Motors Chevrolet Bolts due to the risk of battery fires.

In the same month, the company and Chrysler's parent company Stellattis signed an agreement to establish a battery factory in North America. Meriz Securities analyst Rho Wooho said that LG Energy is expected to also invest in cylindrical battery plants in North America or Europe.

At the time of LG Energy's IPO, electric vehicles became more and more popular and widely accepted worldwide, and with more policy support and increased battery density and cost, the prospects became brighter.

According to Bloomberg New Energy Finance, the sales of passenger electric vehicles, including plug-in hybrids, are expected to increase from 3.1 million in 2020 to 14 million in 2025, accounting for approximately 16% of total passenger vehicle sales. . BNEF said that it is expected that the average battery pack price will fall to US$93/kWh in 2024, US$58/kWh in 2030, and US$45/kWh by 2035.

"LG seems to be trying to reflect almost all costs related to GM's recall in the third quarter, which means there may not be more costs next year," said Changhyun Jeon, an analyst at IBK Securities.

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