LG Siltron picks mandates for $450 mn IPO

SINGAPORE: South Korea's LG Siltron, the world's No.4 polysilicon wafer maker for chips, has hired UBS AG and Woori Investment & Securities Co Ltd as lead managers for a $450 million initial public offering this year, IFR reported.

The IPO, worth an estimated $500 billion won, was expected in the second half of the year, IFR said, citing banking sources with knowledge of the deal.

It comes amid growing expectations that non-Japanese wafer producers may expand their market share in the $7 billion-plus industry after plant closures by major Japanese companies including Shin-Etsu Chemical Co Ltd , the world's largest maker of the chip substrate, following the March 11 earthquake.

Shin-Etsu, which counts the world's top memory chip producers such as Samsung Electronics Co Ltd and Hynix Semiconductor Inc among its clients, has been forced to halt manufacturing at its largest wafer plant, and has given no time frame for restarting.

U.S-based MEMC Electronic Materials Inc has also stopped production at a large plant north of Tokyo affected by the earthquake, with no date set for resumption.

LG Siltron earned 30 p.c revenue from Samsung, 15 p.c from Hynix

LG Siltron, majority owned by LG Corp earned 30 percent of its revenue from Samsung and 15 percent from Hynix in the first nine months of 2010. It is seeking to expand its customer base to the United States, Japan, Europe, China and Taiwan with 300 mm wafers, which are used in more advanced chips that have higher transistor counts .

Analysts say that Shin-Etsu and SumCo Corp accounted for more than 60 percent of Hynix's wafer needs, and LG Siltron and Germany's Siltronic were rounding out the list of suppliers.

Tong Yang Securities is also co-lead manager, IFR reported.

The offering, which follows a $466 million IPO by auto parts maker Hyundai Wia Corp in January, could set the tone for upcoming listings in South Korea.

Electronics retailer Himart aims to raise about $538 million from a share sale in the first half.

LG Siltron reported a net profit of 69 billion won for the first nine months of 2010 on 759 billion won in sales revenue.

The company also produces solar wafers, which are in tight supply due to robust demand growth from China, and is competing with China's LDK Solar , Norwegian solar energy parts maker Renewable Energy Corp and Germany's SolarWorld .