LG India IPO: A confidence booster for Indian market, top sovereign funds interested

The highly anticipated initial public offering (IPO) of LG Electronics India has opened with robust interest from both global and domestic investors, marking one of the largest equity events in the Indian market this year.

The Rs11,607-crore ($1.3 billion) offer has drawn significant participation from sovereign wealth funds, institutional investors and mutual funds, highlighting global confidence in India’s consumer durables sector. Despite being structured entirely as an offer for sale by the Korean parent company, LG Electronics Inc., investor enthusiasm remains strong, reflecting the underlying growth potential of the Indian consumer electronics market.

Anchor investor momentum and global confidence

Ahead of the IPO’s public bidding, LG Electronics India successfully raised Rs3,474.9 crore from 149 anchor investors, signalling strong institutional confidence. Major sovereign wealth funds such as the Abu Dhabi Investment Authority, Norges Bank Investment Management (Norway) and Singapore’s GIC participated in the anchor tranche, alongside global asset managers like BlackRock, Fidelity International, Goldman Sachs and Schroder International.

According to Bloomberg, investment bankers allocated 30.5 million shares at Rs1,140 per share—the upper end of the price band—raising US$505 million through the anchor book. This tranche alone accounted for roughly one-third of the total IPO value and reflected the strong appetite for Indian equities despite recent market volatility and global trade uncertainties.

The strong anchor book participation also demonstrates continued global interest in India’s consumer and manufacturing story.

Notably, India’s equity market—now valued at around $5 trillion—is being seen as resilient enough to absorb large deals, even amid external pressures such as US tariff shifts and mixed corporate earnings.

Public subscription and grey market trends

As the IPO opened for public bidding on October 7, initial response from investors was encouraging.

According to data from the National Stock Exchange cited by MoneyControl, the issue was subscribed 19 per cent within the early hours, with retail investors booking 21 per cent and non-institutional investors (NIIs) 37 per cent of their respective quotas. Qualified Institutional Buyers (QIBs) are expected to join later in the bidding window, a trend commonly observed in large IPOs.

Investor sentiment in the unofficial grey market has been buoyant as well.

The company’s unlisted shares were reportedly trading at a 27–28 per cent premium over the IPO price, a sharp rise from the previous week’s 13 per cent premium. Such grey market activity indicates strong retail and institutional demand and expectations for a successful listing on October 14.

The IPO is entirely an offer for sale (OFS), meaning that no new funds will be injected into LG Electronics India’s operations. Rather, the proceeds will go to the selling shareholder—LG Electronics Inc. Nonetheless, the structure has not deterred interest, given the company’s market dominance and consistent profitability.

Valuation and market position

At the upper end of the price band, LG Electronics India’s valuation stands at approximately $8.7 billion, lower than the initially targeted $15 billion valuation in December 2023. Despite the reduced pricing, analysts believe the IPO offers attractive entry points for long-term investors.

LG Electronics India holds leading market shares across multiple consumer durable categories—washing machines, refrigerators, panel televisions, inverter air conditioners and microwave ovens—particularly in the offline retail segment.

The company’s extensive distribution network and local manufacturing capabilities have solidified its position as a household name in India’s consumer durables space.

Brokerages have highlighted that LG’s strategy of increasing localisation by 1–2 per cent annually has allowed it to strengthen operating margins while maintaining an asset-light model.

The company has delivered a four-year compounded annual growth rate (CAGR) of 13 per cent, with return on equity (RoE) and return on capital employed (RoCE) expected at 45 per cent and 46 per cent, respectively, in FY25.

Analyst recommendations and sector outlook

Equity research firms have largely recommended subscribing to the IPO, citing LG Electronics India’s strong fundamentals, dominant brand position and favourable sector tailwinds.

Elara Capital, for instance, rated the IPO a “must subscribe” with a long-term view, noting that the consumer durables sector is set for double-digit growth amid improving macroeconomic conditions and tax reforms.

The firm emphasised LG’s competitive pricing, efficient asset structure and consistent profitability as key differentiators.

Similarly, Choice Broking assigned a “Subscribe” rating, pointing to LG’s strategic diversification into high-growth business-to-business (B2B) segments and its ability to capture rising urban consumption.

Broader implications and economic context

The timing of LG Electronics India’s IPO coincides with a record-breaking period for Indian equity markets, with October’s IPO proceeds projected to exceed $5 billion. This trend signals both investor confidence and growing global recognition of India as a key growth market.

The IPO’s success also carries symbolic weight.

Beyond capital markets, it reflects the evolving aspirations of India’s middle class and the rising demand for modern, energy-efficient home appliances.

Backed by marquee sovereign funds and asset managers, the offering shows India’s stature as a key investment destination within Asia. The company’s leadership in consumer electronics, solid financial metrics and expanding localisation strategy position it for sustainable growth in a rapidly evolving market.

With robust anchor participation, strong grey market sentiment and favourable analyst outlooks, LG Electronics India’s listing could not only reaffirm investor faith in India’s consumer story but also set the tone for future large-cap IPOs in the country.

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