LG CNS Co., the IT service unit of South Korea’s LG Group, is preparing for an initial public offering (IPO) in early 2023, providing an opportunity for Macquarie Group to exit its investment in LG. The company’s IPO managers have initiated the paperwork to submit a preliminary share listing request to the Korea Exchange in September, with expectations of obtaining approval in November and debuting its shares on the main Kospi market in January next year.
The IPO will be managed by seven local and foreign brokerages, with KB Securities Co., Bank of America, and Morgan Stanley serving as lead managers. Mirae Asset Securities Co., Daishin Securities Co., Shinhan Securities Co., and J.P. Morgan will act as co-managers. LG CNS’ estimated enterprise value stands at 7 trillion won ($5.1 billion), making it the largest company to go public on Korea’s main bourse since LG Energy Solution Ltd. in January 2022.
LG CNS had initially planned to go public in 2022 but postponed its bid due to the COVID-19 pandemic’s impact on the IPO market. However, the successful market debuts of APR Co., HD Hyundai Marine Solution Co., and Shift Up Corp. earlier this year prompted the company to revive its IPO plan. LG CNS aims to take advantage of the “January effect,” where retail investors are typically more willing to invest in new shares at the start of the year.
The IPO will also allow Macquarie Group’s private equity arm to exit its investment in LG CNS. Macquarie acquired a stake in LG CNS from LG Corp. for 950 billion won in 2019, becoming the company’s second-largest shareholder after LG Corp. itself. Other major individual shareholders include LG Chairman Koo Kwang-mo and various members of the Koo family.
LG CNS, established in 1987, is a leading IT service provider in South Korea, specializing in system integration and maintenance services for LG Group affiliates. The company has expanded its business areas to include DX projects in the financial sector, cloud services, smart factory solutions, and artificial intelligence since 2020. It has consistently achieved strong sales and profit growth, with sales surpassing 4 trillion won for the first time in 2021 and recording a record 5.6 trillion won in annual sales in 2022.
While LG CNS has demonstrated impressive financial performance, analysts suggest that the company needs to reduce its reliance on group affiliates for business growth to ensure its corporate value is properly recognized during the IPO. Currently, internal transactions with group affiliates account for approximately 60% of its total revenue. LG CNS plans to utilize the proceeds from the share sale to finance new growth businesses.