Strengthening EV Business
LS Cable will establish an electric car holding company to strengthen its electric vehicle business, a new growth engine. To this end, the company will raise 70 billion won (US$63 million) from private equity funds (PEFs) to improve its financial structure.
According to industry sources on September 7, LS Cable will establish LS EV Solution (tentative name) as a holding company to manage the electric car business early next year. To this end, the company will spin off the Electric Car Division from LS Cable. In particular, LS Cable will invest its 100% stake in LSCW, a subsidiary in China, in LS EV Solution, an electric car holding company.
A 47% stake in LS EV Solution will be sold off to a private equity fund (PEF). The proceeds of the sale will amount to 70 billion won (US$63 million) which will be used to improve the company's financial structure. The private equity fund will be managed jointly by KDB Capital and Paratus Investment.
In the industry, experts believe that LS Cable established an electric car holding company to tap into the market of electric vehicles, a new growth engine. This move is interpreted as a strategy to improve management efficiency by having a separate holding company that focuses on the electric car business.
"We understand that LS EV Solution is aiming for an IPO in 2020," said an investment banker. "LS EV Solution will have an IPO to recover investment funds from the PEF and attract capital from the outside for its future growth.