LG Energy Solution's logo (LG Energy Solution)
With LG Energy Solution’s stock lock-up period ending this week, market eyes are on institutional investors‘ movement, as massive sales of shares may impact a market that remains sluggish with low trading volume.
According to the Financial Supervisory Service’s electronic disclosure system, the lock-up period for LG Energy Solutions shares owned by institutional investors -- 9,960,365 shares (4.26 percent of all shares) since the battery company was listed on January 27 -- will end Wednesday.
The 191.5 million shares (81.84 percent) held by LG Chem, the largest shareholder, will also be unlocked on the same day, six months since the lock-up period began. In total, over 86 percent of LG Energy Solution’s shares will become available for sale.
“Once the locked-up stocks of LG Energy Solution are released, concerns over supply and demand may increase regardless of (the company’s) fundamentals,” Yeom Dong-chan, an analyst at Korea Investment and Securities, wrote in a report.
LG Energy Solution closed at 391,000 won ($297.85), up 2.36 percent from the previous day. At this price, the institutional investors’ 4.26 percent share would amount to 3.9 trillion won.
The release of such large funding could increase the market’s volatility at a time when the daily trading volume of the stock market has hit below 6 trillion won. According to the Korea Exchange, the stock market’s trading volume recorded 5.99 trillion won on July 13, the lowest since Feb. 17, 2020.
Yook Hyuk-jin, an analyst at SK Securities, wrote in an earlier report that the institutional investors in LG Energy Solution who made a six-month holding commitment are likely to rake in profits, as the stock price has risen over 20 percent compared to the public offering price of 300,000 won.
The end of LG Energy Solution’s stock lock-up is also expected to affect other companies’ initial public offerings on the Kospi in the second half, as institutional investors’ sales could provide liquidity amid shrunken trading volume on the Kospi.