LG Electronics Eyes Indian IPO After Hyundai’s Rs 25,000 Crore Move—Will Samsung Follow Suit?

Following Hyundai Motor India Ltd’s recent filing for a Rs 25,000 crore IPO, LG Electronics Inc’s global CEO, William Cho, has indicated that the company is exploring a similar option for its Indian subsidiary. This development has fueled speculation that Samsung Electronics may also consider an IPO for its Indian operations, given the close alignment of strategies among these South Korean conglomerates.

LG Evaluating the Indian Market for IPO Possibility

In a Bloomberg interview, Cho shared that LG is studying the Indian market and monitoring other IPOs within the industry. However, he clarified that no definitive decision or valuation for the Indian unit has been established yet.

South Korean Giants Often Mirror Each Other

Yasho V Verma, a former Chief Operating Officer of LG Electronics India, observed that South Korean companies like LG and Samsung often replicate each other’s business moves in India. Though Samsung has not publicly discussed an IPO for its Indian arm, insiders suggest that such decisions would originate from their Seoul headquarters.

Samsung and LG’s Parallel Operations in India

Since entering India in the mid-90s, Samsung, LG, and Hyundai have established extensive operations, including factories and research centers. These companies also share a unique management structure where Indian executives are paired with South Korean counterparts, who hold significant decision-making authority.

Strategic Motivations for Potential IPOs

Ravinder Zutshi, Samsung India’s first Indian employee and former deputy managing director, noted that South Korean brands have become well-established in India and might now seek to leverage this success through IPOs, especially with increasing interest from Indian retail investors. Zutshi also mentioned that future regulations might require these companies to invest more locally, making an IPO a strategic move to raise capital within India.

Financial Performance

In FY23, Hyundai India reported revenues of Rs 60,307 crore, Samsung India Rs 98,924 crore, and LG India Rs 20,112 crore, with net profits of Rs 4,709 crore, Rs 3,452 crore, and Rs 1,345 crore, respectively. Industry insiders have noted LG’s plans to establish a third manufacturing plant in South India, possibly near Chennai, where Samsung already operates a facility.

India’s Supportive Market Environment

Rakesh Srivastava, a former managing director of Nissan India and ex-director of Hyundai Motor India, emphasized that India’s market is highly conducive to investment, with stable governance and strong stock market performance. As companies prepare for the future, they will need to invest in new technologies and production capacity, possibly driving them to explore IPOs to raise the necessary funds.