(Bloomberg) — LG CNS Co. is poised to price its initial public offering at the top of its marketed range, people familiar with the matter said, putting the deal on course to raise 1.2 trillion won ($823 million) and become South Korea’s biggest listing in three years.
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Shares of the unit of LG Corp. will likely be priced at 61,900 won, according to the people, who asked not to be named discussing a private matter. Demand largely came from local investors, while international funds were lukewarm to the offering amid political instability in the country, according to the people. Deliberations are ongoing and the pricing may change, the people said. The final offer price is scheduled to be announced on Friday.
LG and a private equity fund of Macquarie Group Ltd., which bought a 35% stake in CNS in 2020, are benefiting from a sudden recovery in Korean stocks in January. The benchmark Kospi is outperforming all major stock indexes in Asia this year, and is trading above its levels last month before President Yoon Suk Yeol’s short-lived martial-law order pushed the country’s markets into turmoil.
But last year’s slump prompted some bargain-hunting investors to judge that the political turmoil had been priced in, leading to the recent rally.
A spokesman for LG CNS, which like Samsung SDS Co. helps develop back-end software services for companies, declined to comment on the pricing but said the company plans to use the proceeds to invest in its various businesses. The shares are expected to begin trading Feb. 4.
The LG CNS IPO will be the first major deal in Korea since the political crisis erupted in December. It’s also the biggest listing in Seoul since the IPO of a fellow LG unit, battery maker LG Energy Solution, raised more than $10 billion in early 2022.
The upper end of LG CNS’s IPO price range implies a valuation of 15 times 2025 earnings, higher than the 12 times multiple of its peer Samsung SDS, according to estimates by Clarence Chu, an Aequitas Research analyst who publishes on the Smartkarma platform.
KB Securities Co., Bank of America Corp. and Morgan Stanley are the joint global coordinators.
Local online lender K Bank Co. postponed its IPO again this month, citing valuation concerns. K Bank has said it will resume the deal when conditions improve.
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–With assistance from Youkyung Lee.
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