SEOUL -- LG Energy Solution, the battery-making subsidiary of South Korea's LG Chem, went public last Thursday and ended its first trading day with its stock 68% higher than the initial offering price and a market capitalization of around $97 billion.
The IPO was spearheaded by Chief Executive Kwon Young-soo, a pillar of the LG Group who has taken back the helm of the battery business launched by the late former chairman, Koo Bon-moo.
Kwon beat the drum at the traditional 9 a.m. listing opening ceremony at the Korea Exchange (KRX) in Seoul. The market capitalization of 118 trillion won ($97.2 billion) based on the closing price is the exchange's second largest, much higher than the 43 trillion won of LG Chem, which owns 82% of LG Energy, and the 20 trillion won of LG Electronics, a core company of the LG Group.
The successful IPO has taken some pressure off Kwon. Electric vehicle batteries were a signature business for Koo Bon-moo, the former LG Group chairman who died suddenly in 2018. It again fell to Kwon to take the burgeoning business through another growth phase.
"Chairman Koo Bon-moo would celebrate this occasion more than anyone else," said Kwon at a gathering held after the opening ceremony when he thanked everyone for their help. "We are able to have this day thanks to his sweat and blood." Kwon credited Koo and other senior LG executives for their persistence and tenacity.
Kwon himself has worked at LG Group for 43 years, and joined LG Electronics in 1979 straight out of Seoul National University. After leading corporate planning and finance, he was promoted to managing director at the age of just 39, making him the youngest executive in the LG Group top management at the time. In 2007, he was made president of LG Philips LCD, the liquid crystal display manufacturer today known as LG Display.
LG Energy Solution is expanding capacity at its six EV battery plants around the world in order to overtake China's CATL as the world's leading producer. (Photo courtesy of the company)Unlike most South Korean top-down conglomerates, LG Group has a more fluid corporate culture that promotes "harmony among people" as the company credo. Kwon's management style embraces open-minded dialogue with colleagues regardless of their positions. He is a good listener and always open with his own thoughts.
But some of the LG group's founding family members were uncomfortable with the attention Kwon attracted inside and outside the group, and that led to his ouster as president of LG Display in 2011.
Chairman Koo Bon-moo responded by putting Kwon in charge of LG Chem's battery department -- a relatively minor business in those days accounting for less than 10% of the company's total sales. At that time, LG Chem had just opened its first electric vehicle battery plant in South Korea.
The transfer of the chief executive of LG Display to head of a department in the group appeared to be a relegation. LG Group people talked about Kwon's "demotion."
But Kwon saw the importance of batteries as the EV age dawned, and threw himself into research and development. He made customers of General Motors and Ford Motor of the U.S. and Renault in France. He pushed ahead of rival Samsung, giving LG the second largest EV battery business in the world after China's Contemporary Amperex Technology (CATL).
All this rewarded Koo's faith in him, and in 2016 Kwon was made chief executive of LG Uplus, the group's mobile telecommunication company. His job was to reconstruct the unit and lift it from a perennial third place in the domestic market after SK Telecom and KT.
In May 2018, with the restructuring only half completed, Koo Bon-moo died suddenly and was replaced by Koo Kwang-mo, a 40-year-old nephew. Kwon was recalled to the group's holding company as chief operating officer to mentor the neophyte chairman in business management.
Kwon also chairs LG Electronics and LG Chem, both core units of the conglomerate, and presides over the restructuring of the overall group. In addition, he became chief executive of LG Energy Solution in 2021 after some unexpected exposure that would have affected the unit's stock market debut.
Riding on the global shift to EVs, battery sales tripled in the three years up to 2020. That December 2020, after the business had been spun off from LG Chem into LG Energy Solution and the IPO process was underway, a problem emerged with some batteries supplied to EV makers catching fire.
South Korea's Hyundai Motor and GM recalled a substantial number of EVs in 2020 and 2021 because of the fire risk, and LG paid more than half of the recall costs, compelling it to book a special loss.
With all his EV battery experience, Kwon was needed back at LG Energy to get the IPO back on track. The protracted negotiations with GM over recall costs affected the LG Energy Solution listing process, forcing the IPO to beyond 2021.
When he resurfaced at LG Energy in November 2021, Kwon took the measure of its main rival, CATL in China. "As far as material technology and intellectual property are concerned, we are ahead," said Kwon on an investor call to outline LG Energy Solutions's operations in the run-up to the IPO. "Our customers are Western global companies, so we will overtake (CATL) in market share in future," he said, expressing confidence that LG Energy is on course to become the world's biggest EV battery maker.
LG Energy plans to use about 1 trillion yen raised in the IPO to expand production at six battery plants around the world, and to speed up development of the next generation of batteries, thereby closing the gap on CATL.
On his return, Kwon found the EV battery business landscape considerably changed from a decade ago. Major automakers are now all producing EVs and in the market for new batteries.
Chairman Koo dreamed of making LG the world's biggest EV battery producer, and it was he who rescued Kwon after a career reversal in 2011. With 43 years under his belt at LG, his sights are now firmly set on CATL to crown a triumphant run.
"The listing is a milestone," said Kwon. "We regard it as a starting point for the next 100 years."
