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LG CNS aims for $4.1 billion valuation in February IPO

Published: 09 Jan. 2025, 17:41 Updated: 09 Jan. 2025, 18:55

LEE JAE-LIM
[email protected]

LG CNS CEO Hyun Shin-gyoon speaks at the press event to explain the company's roadmap in its upcoming initial public listing in western Seoul's Conrad Seoul on Jan. 9. [LG CNS]

LG CNS, the IT arm of LG Group, is aiming for a peak valuation of 6 trillion won ($4.1 billion) in its initial public offering (IPO), driven by increasing global demand for digital transformation services. This marks the largest IPO within the conglomerate since the 2022 listing of its battery unit.

“We aim to strengthen our digital transformation [DX] technology capabilities in AI and the cloud, and actively expand our global business, leveraging this IPO as a stepping stone to become a ‘first mover’ in the global DX market,” said LG CNS CEO Hyun Shin-gyoon at a press event held at the Conrad Seoul in western Seoul on Thursday.

The company submitted a securities registration statement to the Korea Exchange last month with KB Securities, the Bank of America and Morgan Stanley as major underwriters.

It aims to go public on the main Kospi bourse in February. The total number of shares offered is set at 19,377,190, with a target offering price range of 53,700 won to 61,900 won per share.

The maximum amount of funds raised would be 600 billion won, which the company plans to invest in mergers and acquisitions, infrastructure and debt repayment.

Half of these shares, or 9,688,595, are existing shares sold by current shareholders, with the main entity being Macquarie Asset Management, which holds a 35 percent stake in the company.

Macquarie is the second-largest shareholder of LG CNS following the subsidiary’s holding company, LG Corporation, which owns 49.95 percent.

Regarding market concerns about offering existing shares in the IPO, LG CNS Chief Financial Officer Lee Hyun-gyu explained that the “modest” share price lower than the valuation perceived by the market can alleviate such an issue.

“We did not set the proportion of new shares higher than necessary, considering the company’s current cash reserves,” Lee said.

The IT solutions company's revenue has seen a continuous upswing. It posted 5.6 trillion won in revenue and 464 billion won in operating profit in 2023, marking year-over-year increases of 12 percent and 20 percent, respectively.

Another area of concern is the unfavorable environment of the domestic IPO market, influenced by political instabilities and economic challenges.

On Wednesday, Kbank withdrew its IPO plans, citing external and internal market uncertainties.

"Overseas investors in Hong Kong and Singapore are showing interest in the domestic political situation, yet many foreign asset managers have maintained their willingness to invest despite prevailing conditions," Hyun said.

The company initially attempted an IPO in 2022, but withdrew due to unfavorable market conditions.

BY LEE JAE-LIM [[email protected]]