LG Electronics considers an IPO in India to pursue its $75 billion target

LG Electronics Inc. is exploring the possibility of an initial public offering (IPO) for its Indian operations, aiming to leverage a thriving stock market to reach its $75 billion electronics revenue goal by 2030.

CEO William Cho indicated that launching in the Indian market is one of several strategies being considered to rejuvenate the company’s long-established consumer electronics division. This marks the first time the South Korean firm, which competes directly with its larger rival Samsung Electronics Co., has publicly discussed the prospect of an IPO in India amidst ongoing market and media speculation.

Cho has set a target to increase the electronics industry’s annual revenue to 100 trillion won ($75 billion) by 2030. Cho rose to the top position in the family-owned LG Group in 2021, having worked there for more than three decades. That compares to the company’s projected $65 billion in total sales in 2023. By the end of the decade, it wants to reach approximately 45% of sales from other companies, up from 35% currently, and part of the way to that goal is by earning more from enterprise clients.

Cho said to Bloomberg Television, “It is one of many options we can consider.” Regarding a prospective IPO in India, he remarked, “I understand there’s increased interest among global investors.” “There is no confirmation as of yet.”

LG aims to maintain steady growth in India. Revenue at LG’s unit in the Asian nation increased by 14% to a record 2.87 trillion won in the first half of this year, while net income increased by 27% to 198.2 billion won.

Any IPO would take place when India’s capital markets were expanding. It is one of the busiest markets in this sector, with about 189 companies hoping to raise $5.6 billion by selling shares this year. As domestic money drives companies to consider listing, at least 30 initial public offerings (IPOs) have entered the pipeline. According to a Bloomberg News story this month, Korean competitor Hyundai Motor Co. is getting ready to raise as much as $3.5 billion through an Indian IPO.

According to Cho, “We have been closely monitoring the Indian market’s IPO landscape and keeping an eye on cases from the same industry.” He said LG hasn’t determined potential valuations for its Indian operation yet.

Cho, 61, intends to foster the growth of new companies with the potential to generate over 1 trillion won in revenue annually. One of these is HVAC (heating, ventilation, and air conditioning), for which the business has 11 production facilities worldwide. As businesses seek generative AI, artificial intelligence data centers are proliferating globally. Central to these centers are chillers, which are essentially massive air conditioners for buildings. Sales of LG’s chillers abroad have increased by 40% a year on average over the last three years.

LG is also growing its subscription service for home appliances. In Korea, customers can rent items like washing machines and laptops for periods of three to six years with a monthly fee. This approach aims to enhance affordability and convenience, with around 35% of consumers currently choosing subscriptions, according to Cho. The company has recently introduced this subscription model in Malaysia and plans to extend it to Thailand, Taiwan, and India this year, with potential expansions to the US and Europe in the future. LG anticipates that revenue from the subscription service will increase by 60%, reaching approximately $1.3 billion in 2024.

The company also plans to enhance its free, ad-supported streaming services. Cho mentioned that LG will invest $1 trillion by 2027 to expand its webOS-based advertising and content business.

“Half of my career has been spent outside Korea, focusing on understanding customers and developing new business models for them,” said Cho, who has experience with LG in North America, Germany, and Australia.