LG ‘s IPO Launch in India to help reach its $75 Billion goal

LG Electronics Inc. is exploring the possibility of an initial public offering (IPO) for its India business, aiming to capitalize on the country’s thriving stock market to help achieve its ambitious target of $75 billion in electronics revenue by 2030. CEO Cho disclosed that joining the Indian market is one of several strategies being considered to renew the company’s consumer durables business. It marks the first time in the South Korean electronics giant, a direct competitor to Samsung Electronics Co., has publicly addressed the prospect of an Indian IPO, a topic that has been the subject of persistent market speculation and media attention.

William Cho, LG’s CEO since 2021 and a 30-year company veteran, has set an ambitious goal for the electronics business. His goal is to reach an annual revenue of 100 trillion won ($75 billion) by 2030, marking a significant expansion for the tech giant. This target represents a significant increase from the company’s overall revenue of approximately $65 billion in 2023. To achieve this growth, LG plans to focus on increasing its revenue from enterprise clients, aiming to derive about 45% of sales from other companies by the end of the decade, up from the current 35%. While acknowledging the increased interest among global investors in a potential IPO in India, Cho emphasized that nothing has been confirmed at this stage, stating, “It is one of many options we can consider.”

The contemplation of an Indian IPO comes at a time when LG is experiencing rapid growth in the country. In the first half of this year, revenue at LG’s Indian unit surged by 14% to a record 2.87 trillion won, while net income saw an impressive 27% increase to 198.2 billion won. The robust activity in India’s capital markets is evident in this impressive showing. A total of 189 companies are set to raise $5.6 billion through initial public offerings this year, positioning India as one of the most vibrant markets for equity fundraising globally. The surge in demand, driven by domestic investment, has prompted at least 30 additional companies to explore potential listings. LG’s Korean counterpart Hyundai Motor Co. is also eyeing a major Indian IPO, with plans to raise up to $3.5 billion.

Cho disclosed that LG is closely tracking Indian market trends, especially concerning IPOs and comparable industry situations. However, he noted that the company has not yet calculated potential valuations for its Indian unit. This cautious approach underscores the strategic importance of the decision and the need for thorough evaluation before proceeding with any public offering.

Beyond the potential Indian IPO, Cho outlined his vision for nurturing new businesses that can each generate more than 1 trillion won in annual revenue. A key focus area is the heating, ventilation, and air-conditioning (HVAC) sector, where LG already operates 11 production sites globally. The company’s chillers, which are large air conditioners designed for buildings, have become particularly crucial for artificial intelligence data centers that are proliferating worldwide in response to the growing demand for generative AI capabilities. Over the past three years, LG has seen its overseas sales of chillers grow by an impressive 40% annually on average.

Another significant initiative is the expansion of LG’s subscription service for home appliances. In Korea, consumers can now rent products such as washing machines and laptops for periods ranging from three to six years by paying a monthly fee. The subscription model has proven popular, with 35% of consumers choosing this option. Building on this success, LG has launched subscriptions in Malaysia and aims to expand to Thailand, Taiwan, and India this year, with future plans for the US and Europe. The company projects that revenue from the subscription business will surge by 60% to about $1.3 billion in 2024.

LG is also setting its sights on the digital content and advertising space, with plans to invest 1 trillion won by 2027 to grow its webOS-based advertising and content business. This includes the expansion of free ad-supported streaming services, leveraging the company’s expertise in consumer electronics to create new revenue streams in the digital media landscape.

Reflecting on his career and vision for LG, Cho, who has worked with the company across North America, Germany, and Australia, emphasized the importance of understanding customers and creating innovative business models tailored to their needs. His global experience has shaped his approach to leading LG into new markets and business areas, positioning the company for growth in an increasingly competitive and rapidly evolving technology landscape.

The image added is for representation purposes only