LG Electronics Inc. is contemplating an initial public offering (IPO) in India, tapping into a thriving stock market to help achieve its ambitious goal of reaching $75 billion in electronics revenue by 2030.
LG CEO’s Vision for the Future
William Cho, the Chief Executive Officer of LG Electronics, revealed that an IPO in the Indian market is one of several ideas being considered to rejuvenate its long-standing consumer electronics division. This marks the first occasion the South Korean giant, which often vies with bigger competitor Samsung Electronics Co., has publicly addressed the notion of entering the Indian market amid ongoing market and media rumors.
Since rising to the CEO position in 2021 after over three decades with the flagship of the LG Group, Cho has aimed to elevate the electronics business to an annual revenue of 100 trillion won ($75 billion) by 2030. This goal stands in contrast to the company’s overall revenue of around $65 billion in 2023. Part of this strategy involves increasing revenue from enterprise clients, aiming for roughly 45% of sales from other companies by the end of the decade, up from the current 35%.
“It is one of many options we can consider,” Cho told Bloomberg Television. “I understand there’s increased interest among global investors,” he added, referring to the potential for an Indian IPO. “As of now, nothing is confirmed.”
Impressive Growth in the Indian Market
LG is eager to maintain its rapid growth in India. In the first six months of this year, LG’s Indian unit recorded a 14% revenue increase, reaching a new peak of 2.87 trillion won, while the net income surged 27% to 198.2 billion won.
Any IPO would coincide with a surge in India’s capital markets. This year, 189 companies are anticipated to sell shares, raising approximately $5.6 billion, making it one of the busiest markets in this realm. At least 30 IPOs joined the pipeline, with local money driving companies to consider going public. Hyundai Motor Co., another Korean peer, is reportedly preparing to raise up to $3.5 billion through an Indian IPO, according to Bloomberg News.
“We have been watching carefully what’s going on in the Indian market in terms of IPOs and following similar industry and similar IPO cases,” Cho noted. LG hasn’t yet calculated possible valuations for its Indian unit, he added.
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Expanding Beyond Traditional Electronics
Cho, aged 61, plans to foster new businesses capable of generating over 1 trillion won in annual revenue each. Among these is the heating, ventilation, and air-conditioning (HVAC) sector, where the company operates 11 production sites globally. Large air conditioners, also known as chillers, have become vital for artificial intelligence data centers, springing up worldwide as businesses strive for generative AI. Over the past three years, LG’s chiller sales abroad have grown by 40% annually, on average.
Additionally, LG is growing its subscription service for home appliances. In Korea, consumers can rent products such as washing machines and laptops for three to six years by paying a monthly fee. This model theoretically improves affordability and convenience, with about 35% of consumers opting for subscriptions, according to Cho. LG recently introduced subscription services in Malaysia and plans to extend this model to customers in Thailand, Taiwan, and India by the end of the year, with potential future expansions to the US and Europe. The company expects subscription revenue to jump 60% to approximately $1.3 billion in 2024.
LG is also planning to invest significantly in its free ad-supported streaming services. Cho announced the company will allocate 1 trillion won by 2027 to develop its webOS-based advertising and content business.
“Half of my career was spent outside Korea, and it is about understanding customers and creating new business models for them,” said Cho, who has had roles with LG in North America, Germany, and Australia.
