The tech giant, LG also plans to expand its subscription services for home appliances.
LG Electronic Inc. is highly considering taking its business in India public. It is a move that will help the company achieve their goal of reaching $75 billion by 2030. The initial public offering taps on a fast-growing stock market which can be a means of hitting their target.
William Cho, the Chief Executive Officer of LG Electronics said that their debut in the Indian market is a way to reach their end goal. It is one of the several options the tech giant is weighing out to strengthen their consumer electronics business which is a decade old.
Amid many ongoing speculations and interests from the investors, it is the first ever time a potential Initial Public Offering (IPO) of a South Korean tech giant has been discussed being a part of the Indian stock market in the open.
CEO, Cho said that entering the Indian market is one of the many options the company can consider despite the increased interest among global investors. “As of now, nothing is confirmed,” he added.
After more than three decades, Cho assumed leadership of the family-owned LG Group in 2021. He has set a goal to raise the electronics company’s yearly sales to 100 trillion won ($75 billion) by 2030. That compares to the company’s overall sales of approximately $65 billion in 2023. It intends to achieve this in part by increasing revenue from business clients, with a goal of 45% of total sales from other companies by the end of the decade, up from 35% presently.
LG aims to grow rapidly in India and hopes to maintain it. The revenue of LG’s unit within the Asian country rose 14% to a record of 2.87 trillion won, similarly the net income also rose to a 198.2 billion won with a 27% increase in the first six months of 2024.
Any IPO would coincide with a surge in India’s capital market. This year, more than 200 companies went public in IPOs that raised $7.1 billion, making it one of the most active markets in this category. At least 30 IPOs have entered the pipeline as domestic demand drives companies to consider listing. Hyundai Motor Co., a Korean rival, is planning an Indian IPO that may raise up to $3.5 billion, Bloomberg News reported last month.
“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 said. LG hasn’t yet calculated possible valuations for its Indian unit, he added.
William Cho, who is 61 and aims at nurturing new businesses that can bring in more 1 trillion won of revenue annually each. Among the many businesses it includes air conditioning, heating and ventilations and the company owns close to 11 production sites for it. Chillers which are the larger air conditioners for buildings, have become essential for artificial intelligence data centres, which are popping up all over the world as businesses pursue generative AI. Over the last three years, LG’s overseas chiller sales have increased by 40% per year on average.
The tech giant, LG also plans to expand its subscription services for home appliances. Consumers can rent products like washing machines and laptops in Korea. They range from 3 years to 6 years with a monthly rent payment. This concept further improves affordability and proves to be convenient. According to CEO Cho, about 35% of the people are opting for the subscription option for the products.
The company just began offering subscriptions in Malaysia and wants to expand the model to clients in Thailand, Taiwan, and India this year, as well as the United States and Europe in the future. LG anticipates subscription income to climb 60% to $1.3 billion by 2024.
The corporation also intends to extend its free, ad-supported streaming offerings. Cho stated that LG will invest one trillion won by 2027 to expand 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 CEO Cho, who has worked with LG in North America, Germany and Australia.
