LG Chem to invest W150 bil. in battery tech, ESG fund

LG Chem will invest 150 billion won ($134 million) in a fund aimed at better nurturing second battery technologies and environmental, social and corporate governance (ESG)-related businesses in Korea, the company announced on Tuesday.

The investment will account for about one third of the Korea Battery & ESG (KBE) Fund to be managed by IMM Credit Solution, a unit of IMM Private Equity, one of Korea’s largest asset management firms.

This will make LG Chem as KBE Fund’s anchor limited partner, a term referring to the first investor to make a substantial capital commitment to a fund.

This also will mark LG Chem’s first time participating in a fund that is not linked to LG Group, under which the chemical manufacturer operates.

LG Chem previously invested in LG Technology Ventures, a venture capital fund worth $400 million jointly created by LG Group’s affiliates such as LG Electronics.

“The KBE Fund is estimated to be 400 billion won or more, with a goal of finding and supporting companies with high growth potential in related sectors,” LG Chem said.

It assessed its industrial and technological expertise, combined with IMM Credit Solution’s corporate analysis capability, can especially contribute to the targeted fields.

Accordingly, LG Chem Vice Chairman and CEO Shin

Hak-cheol expressed hope to enhance the ESG ecosystem together with smaller companies and discover next-generation technologies through the KBE Fund.

The fund will cover areas related to electric vehicle (EV) battery manufacturing, such as cathode and anode materials and outer cover materials.

In relation to ESG are recycling of plastics and other polymers, biodegradable technology and other eco-friendly sectors.

LG Chem wholly owns the battery-making unit LG Energy Solution.

As part of efforts to become a leader in high-tech materials, LG Chem plans to recruit hundreds of new employees specialized in battery materials this year.

It also plans to expand its cathode materials production capacity to 260,000 tons by 2026, up from 40,000 tons in 2020.

The company has been stepping up research and development for eco-friendly and carbon-neutral materials. Among them are post-consumer resins recycled (PCR) plastics, superabsorbent polymer (SAP), polyolefin (PO) and acrylonitrile butadiene styrene (ABS).

The firm was one of LG Group’s 13 key affiliates to form an ESG committee this year for better transparency and long-term sustainability of the group.

The committee oversees corporate policies on key areas including the environment, safety, social responsibility, customer value, shareholder value and governance.