LGES forms largest IPO underwriting syndicate since Samsung Life deal LG Chem's battery subsidiary hires 11 IPO advisers

Translated by Kim So-in 공개 2021-12-03 08:14:35

이 기사는 2021년 12월 02일 08:05 더벨 유료페이지에 표출된 기사입니다.

South Korea’s LG Energy Solution (LGES) has created the largest underwriting syndicate consisting of seven lead and co-managers and four underwriters for its planned initial public offering (IPO), which is on par with the number of advisers for Samsung Life Insurance’s listing in 2010.

LGES has added four underwriters - Mirae Asset Securities, Hana Financial Investment, Hi Investment & Securities, and Shinyoung Securities - to the list of its IPO advisers, bringing the total to 11, according to industry sources.

The company’ selection of advisers for the blockbuster IPO has drawn strong attention from market insiders. Even after the selection was finalized, a number of large and smaller brokerage firms continued to contact the company to take part in the deal.

In the Korean IPO market, there is little difference in commission rates for lead managers, co-managers and underwriters. This means even a smaller role in a deal could earn hefty commission fees depending on the allotment of underwriting stocks.

KB Securities and Morgan Stanley will act as lead managers in the offering, while Shinhan Investment Corp, Daishin Securities, Citi Group Global Market Securities, Goldman Sachs, and Bank of America are co-managers.

Each underwriting firm is expected to underwrite less than 10% of the offered shares, which means lead managers and co-managers will likely take around 80% of the offered shares.

Given LGES is targeting to raise up to 12 trillion won ($10.1 billion), the absolute amount that each underwriter will take is not small. Assuming each underwriter gets to underwrite 5% of the offered shares, the value will amount to a whopping 600 billion won, which is comparable to the size of any big IPOs.

LGES' underwriting syndicate is the largest since Samsung Life Insurance’s listing in 2010, in which the life insurer also hired 11 advisers consisting of five lead and co-managers and six underwriters.

The number of brokerage firms participating in underwriting syndicates for big deals worth multi trillion won is on the decrease. A total of 11 firms participated in Samsung Life Insurance’s IPO in 2010, while nine firms each participated in Hyundai Rotem’s listing in 2013 and Samsung Biologics’ listing in 2016.

In 2020 and 2021, six or seven brokerage firms participated in big deals, such as Krafton, Kakao Bank, KakaoPay, SK Bioscience and SK IE Technology.

It is notable that top three brokerage firms in the domestic IPO market – NH Investment & Securities, Korea Investment & Securities, and Mirae Asset Securities – all failed to be hired as either lead or co-managers, with only Mirae Asset Securities selected as a underwriter. Another major broker Samsung Securities also failed to win an advisory role in the deal.

LGES plans to file its registration statement on Wednesday, aiming to go public in January 2022. (Reporting by Seok-cheol Choi)
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