LG headquarters in Seoul Companies under South Korea’s fourth-largest conglomerate LG Group scrambled to sell shares and bonds to raise 4 trillion won ($2.8 billion) early this year to benefit from lower borrowing costs ahead of the central bank’s anticipated rate cuts.
According to the investment banking industry on Thursday, LG Group companies sold 2.96 trillion won worth of corporate bonds so far this year.
LG companies’ total debt sales accounted for 24% of the country’s total corporate bond issuance of 12.03 trillion won ($8.3 billion) in January.
Its battery-making unit LG Energy Solution Ltd. recently raised 1.6 trillion won from a bond sale, followed by its digital broadcasting service sibling LG HelloVision Co. and mobile carrier affiliate LG Uplus Corp., which raised 160 billion won and 600 billion won, respectively.
LG Energy Solution plant in Poland (Courtesy of LG Energy Solution) The credit spread for bonds with an AA- rating narrowed to 59.2 basis points (bps) as of Feb. 12 from 69.0 bps on Dec. 2, 2024, reflecting bullish credit investor sentiment.
LG Energy Solution initially planned to sell 800 billion won worth of bonds but its bond sale was oversubscribed to 3.7 trillion won during book building.
LG Chem, LG Uplus and LG HelloVision’s bond sales were also oversubscribed to 1.7 trillion won, 3.1 trillion won and 1.1 trillion won, respectively.
Hyun Shin-kyun, CEO of LG CNS, speaks at a press conference on Jan. 9, 2025 (Courtesy of LG CNS) Of the total, 600 billion won worth of capital was raised from LG CNS's new share sales.
FUNDS FOR NEW BUSINESS AND EXPANSION
LG Group companies have flocked to the debt and equity markets to raise capital early this year in order to make investments to bolster growth through expansion and new growth drivers.
LG Energy Solution plans to spend 1.1 trillion won worth of the funds raised from the latest bond sale on acquiring other companies or stakes in them.
It plans to build separate electric vehicle battery joint ventures in North America with Hyundai Motor Group, Honda Motor Co. and Stellantis NV to cope with EV demand in the region.
LG CNS will use about 60 billion won of its IPO proceeds to acquire companies in the smart engineering, digital transformation, and artificial intelligence and software sectors through next year, the company said.
IB sources expect more LG companies to join their siblings to raise funds in the debt and equity capital markets.
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