LS Group is entering the power supply stabilization equipment market in cooperation with private equity funds.
The move may be construed as the business group’s bid to secure an upper hand in the power supply stabilization equipment market, which is predicted to surge in the wake of the expansion of renewable energy generation.
Investment bank sources said Keistone Partners decided to invest 22 billion won in LS Materials. LS Materials is a new company spun out from LS Mtron’s Ultra Capacity Business.
LS Cable & System (LS C&S) is expected to retain its status as the largest shareholder in LS Materials, following Keistone Partners’ investment.
UC is a device designed to stabilize the supply of power to hydrogen fuel cell cars and the power generation of wind power farms.
Wind power and photovoltaic power facilities have generated electricity in an intermittent and irregular fashion, so auxiliary devices such as UC are essential to stabilize energy production.
LS Materials specializes in the UC market for the supplementary power supply to the generation of wind power farms.
The shelf life of the storage battery is two or three years, but that of UC is 10 years to 20 years, so the latter can dramatically reduce management and replacement costs.
LS Materials sees more than 40 percent of its sales come from companies related to wind power generation, and the company supplies UCs to heavy equipment, transportation and automobile industry sectors.
The market survey company Global Industry Analysts reported that the value of the global UC market is forecast to surge from $3.2 billion (3.8 trillion won) in 2020 to $12.7 billion (15 trillion won) in 2027.
In 2019, Keistone Partners acquired a 49 percent stake in LS Alsco for 31 billion won. LS Alsco was spun from LS Cable & System’s aluminum business.
LS Cable & System is laying undersea cables at an off-shore wind farm off the sea in Rhode Island, the Unites States. (Photos: LS Group)
LS Alsco has been recognized for developing high-intensity new materials of aluminum. The company plans to expand its business to EV battery frame and other segments down the road.
Following Keistone Partners’ investment, LS C&S and Keistone Partners own a 55 percent stake and a 45 percent stake, respectively.
LS Alsco is a 100 percent affiliate of LS Materials to have synergetic effects in the renewable energy market.
LS C&S and Keistone Partners plan to make an initial public offering (IPO) in 2022 or 2023. In a consolidated financial statement, counting LS Alcos, LS Materials posted 130 billion won in sales and 10.2 billion won in operating profit in 2021, business sources said.
The company is predicted to chalk up 190 billion won in sales and 18 billion won in operating profit in 2023.
LS C&S’s efforts to expand its business portfolio to eco-friendly energy businesses are made in the context of LS Group’s decision to ramp up ESG management.
In November, the business group conducted a massive reshuffle, appointing Chairman Koo Ja-eun to be its new group chairman, and promoting 47 executives.
Chairman Koo stressed “agile” management to cope with rising demand of global eco-friendly energies.
LS C&S, which has flexed its muscle in the renewable energy market since a few years ago, has managed to land all offshore undersea cable orders Taiwan has placed for the past three years.
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