LG Chem, a chemicals and battery unit of South Korean conglomerate LG Corp, is investing 150 billion won ($134 million) in a new fund that will invest in companies focused on battery technologies and eco-friendly materials.
In a statement, LG Chem said it will be an anchor investor in Korea Battery & ESG Fund, which plans to raise a total of 400 billion won ($355 million). The fund is managed by IMM Credit Solution, a wholly-owned subsidiary of domestic private equity firm IMM PE.
This is the first time that LG Chem will invest as a limited partner in funds raised by an external asset management company.
“This investment will become the stepping stone for LG Chem to strengthen the ESG industrial ecosystem together with prospective SMEs and medium-sized corporations, and to continuously find future growth engines,” said LG Chem CEO Hak Cheol Shin in a statement.
The fund will potentially invest in companies involved in core materials for electric vehicle batteries, such as cathode and anode material manufacturing, recycling core metals for batteries, among others.
It will also prefer investing in tech firms in the eco-friendly industry materials sectors, including those involved in biodegradable plastic technologies.
“By combining LG Chem’s industrial and technological expertise with IMM Credit Solution’s competencies in analyzing and discovering target companies, the fund is expected to provide a broader perspective on the overall ESG-related industries and also find investment opportunities from the initial stages of prospective companies,” said a statement.
LG Chem is recruiting hundreds of personnel to further develop its advanced materials capabilities, especially in battery materials. It also seeks to increase its cathode production capacity from 40,000 tons last year to 260,000 tons by 2026.
The launch of the fund comes as investors are increasingly taking account of ESG factors, prompting major South Korean firms across manufacturing industries to accelerate their transition to a greener, more sustainable business.
Last year, LG Chem and Hyundai Motor Group were reported to be considering establishing an electric vehicle (EV) battery manufacturing joint venture in Indonesia. The investment size and production capacity have not been decided, according to a Reuters report.