LG Electronics CEO Hints at Potential IPO for Indian Subsidiary Amid Industry Speculation
The electronics industry is currently rife with speculation regarding whether Samsung Electronics might also consider an IPO for its Indian operations. Historically, South Korea’s leading conglomerates—LG, Samsung, and Hyundai—have mirrored each other’s strategies, launches, and manufacturing practices, leading to increased speculation about future moves in the market.
Following Hyundai Motor India Ltd’s filing of a draft red herring prospectus for a Rs 25,000 crore IPO, LG Electronics Inc’s global CEO, William Cho, has confirmed that LG is exploring the possibility of a share sale for its Indian subsidiary. This announcement has further fueled speculation about whether Samsung Electronics might follow suit with an IPO for its Indian business.
In an interview with Bloomberg, LG Electronics CEO William Cho revealed that LG is evaluating the Indian market and keeping an eye on similar IPO cases within the industry. However, Cho emphasized that LG has not yet determined a valuation for its Indian unit and that no final decision regarding an IPO has been made as of now. Cho’s comments suggest that while the possibility of an IPO is under consideration, the company is still in the preliminary stages of assessing this potential move.
LG Electronics CEO and Industry Dynamics
Yasho V Verma, who previously served as the chief operating officer of LG Electronics India, noted that LG and Samsung typically align their business decisions in India, from strategic moves to minor operational details. This historical pattern of mirroring each other’s actions in the Indian market adds to the speculation that Samsung might also be contemplating an IPO for its Indian operations.
At present, Samsung has not made any official statements about the possibility of an IPO for its Indian unit. According to company executives, any such evaluation will be carried out at Samsung’s headquarters in Seoul. Samsung India has not responded to inquiries about this potential development, leaving the industry to speculate based on historical trends and current market conditions.
Samsung entered the Indian market in the mid-90s, followed by LG and Hyundai. All three companies have established significant operations in India, including factories, R&D centers, and localized product offerings. Their organizational structures and sales strategies in India exhibit considerable similarities, reflecting their competitive yet collaborative approach.
In India, LG, Samsung, Hyundai, and Kia operate with a parallel management structure, where each Indian executive has a South Korean counterpart responsible for major decision-making. Kia is part of the Hyundai group, further intertwining the operational strategies of these South Korean giants.
Ravinder Zutshi, the first Indian employee at Samsung India and former deputy managing director, observed that the South Korean firms have become prominent brands in India. Zutshi suggested that these companies might seek to leverage their strong market presence through strategic share sales, especially as retail investor interest in IPOs continues to grow. He pointed out that high valuations for Indian original equipment manufacturers like Dixon and Amber, which seemed unlikely a few years ago, now reflect the increasing investment potential in India.
Zutshi also mentioned that strategic share sales could be a way for these companies to generate local capital, particularly as import challenges and increasing investment requirements in India become more pressing.
Hyundai India’s revenue for FY23 was Rs 60,307 crore, while Samsung India reported Rs 98,924 crore, and LG India had Rs 20,112 crore. The net profits for the same period were Rs 4,709 crore for Hyundai, Rs 3,452 crore for Samsung, and Rs 1,345 crore for LG. FY24 figures are yet to be published.
Industry insiders have noted that LG has long been considering establishing a third manufacturing plant in southern India, with potential sites near Chennai, where Samsung already operates a unit. LG is also expanding its component manufacturing capabilities, having started compressor production last year.
Samsung already operates one of its largest mobile phone plants in India, alongside TV and appliance manufacturing, and has established a display production unit for mobile phones. However, Samsung has not yet introduced its semiconductor business in India, while LG lacks a display plant in the country.
After 28 years in India, Hyundai Motor is expanding its capacity with a second plant set to launch in Maharashtra next year, complementing its existing plant near Chennai. Rakesh Srivastava, an auto industry expert and former managing director of Nissan India and former director of Hyundai Motor India, highlighted that the Indian market offers strong fundamentals and a supportive investment environment. He emphasized that continued investment in products, technologies, and production capacity is crucial for future readiness, and many companies are likely to explore public offerings to generate the necessary capital for these investments.
You might also be interested in – Hyundai files IPO draft to raise Rs 25,000 crore, India’s largest: Key highlights
