The prospect of more and more electric cars in the world is heating up tempers on the Seoul Stock Exchange.

In its record-breaking IPO, battery maker LG Energy Solution opened trading on Thursday at nearly double the issue price of 300,000 won.

Investors and millions of private investors had already shown keen interest in the share in the past few weeks.

LG Energy, a spin-off from parent company LG Chemical, raised 12.8 trillion won ($9.5 billion) in the IPO.

Patrick Welter

Correspondent for business and politics in Japan based in Tokyo.

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This is by far the largest IPO in South Korea.

The record holder was Samsung Life Insurance, which had taken the equivalent of 3.8 billion euros in 2010.

It is also the largest IPO in Asia since 2019, when Chinese e-tailer Alibaba raised the equivalent of €11.5 billion in Hong Kong in 2019.

LG-Energy is second in the market

LG Energy Solution, abbreviated LGES, intends to use the new capital to expand production capacities and close the gap to the world market leader for batteries for electric cars, China's Contemporary Amperex Technology (CATL).

The South Koreans see themselves as having a fundamental advantage because, in contrast to CATL, they are globally positioned with their network of customers and their production facilities.

According to analysts, this could pay off if interest in Chinese manufacturers wanes in the trade dispute between China and the West.

CATL also serves foreign customers, but generates the bulk of its sales in the Chinese market.

LG Energy is also better placed than CATL in materials research and the number of patents, argues boss Kwon Young-soo.

LG Energy's customers include Volkswagen and Audi, Tesla and General Motors, and the alliance of Renault, Nissan and Mitsubishi Motors, among others.

The company announced on Wednesday that it would build a $2.6 billion battery factory with General Motors in Michigan, USA.

For the South Koreans, it is the third factory in the United States.

They also operate plants in Poland and China.

LG Energy is building a battery factory in Canada with Stellantis and in Indonesia with Hyundai Motor.

Rapid growth brings problems

The growth prospects are generally assessed as good.

Kwon points out that the company has collected long-term orders worth 260 trillion won (192 billion euros).

The reorientation towards battery electric cars in China, Europe and the United States offers a lot of potential.

Kwon wants to expand production capacity 2.6 times to 400 gigawatt hours within three years.

LG Energy, on the other hand, also knows the problems of rapid growth.

Last year, it postponed the IPO after GM recalled 142,000 Chevrolet Bolt electric cars because of burning batteries.

The damage cost LG Energy nearly $2 billion.

It wasn't the only recall in recent years.

LG Energy is working with Siemens to improve the production process.

Share failed to hold course

With the successful IPO, LG Energy moved up to second place on the Seoul Stock Exchange with a market capitalization of the equivalent of 88 billion euros.

The newcomer positioned itself between the market leader Samsung Electronics and SK Hynix.

The parent company, LG Chemical, ranks 7th. LG Chemical still owns 81.8 percent of the subsidiary.

However, LG Energy shares failed to hold the opening price on Thursday. Small investors rushed to cash in on the price gain. According to media reports, some securities houses in Seoul had problems with their data servers at times. At the close, the stock was down 15 percent at 505,000 won, but still 68 percent higher than the issue price. The fact that the US Federal Reserve's monetary policy tightening signals generally weighed on the market in Seoul played a role. The Kospi stock index ended trading down 3.5 percent.

The great interest of investors is fueled not least by the expansive monetary policy of the Bank of Korea, which is also reflected in the strong growth in private loans and house prices in the Seoul metropolitan area.

Last year, the South Korean stock market attracted so many companies.

More than 20 new entrants took a total of around 17 trillion won ($14.7 billion).

This broke the previous record from 2010.