LG CNS Faces Dual Woes, IPO Investors Excluded from Dividends, Stock Price Drops

LG CNS has been facing growing controversy following its IPO at an offering price of KRW 61,900, due to issues related to dividend payments and a decline in stock value.

The company decided to pay a dividend of KRW 1,672 per share exclusively to existing shareholders, while investors who acquired shares through the IPO were excluded from the dividend distribution.

Moreover, the stock price has fallen by 19% from the IPO price, leading to significant disappointment among new investors.

The dividend record date for LG CNS is December 30, 2024, meaning that only existing shareholders who hold shares on that date will receive the dividend. As a result, investors who purchased shares through the IPO subscription are excluded from this payout.

The issue extends beyond dividend exclusion, as the stock price has also been on a downward trend.

From the IPO price of KRW 61,900, the stock closed in the high KRW 40,000 range on the 27th, leaving new shareholders not only ineligible for dividends but also facing investment losses.

One investor who participated in the IPO subscription expressed frustration, saying, "I was looking forward to receiving dividends, but being excluded is frustrating. On top of that, the stock price has dropped by more than 19%. I had high expectations for this IPO, but I am deeply disappointed."

The dividend will be distributed only to existing shareholders, including LG (52.3%), Crystal Korea—established by Macquarie Infrastructure Asset Management (35.0%)—minority shareholders (12.6%), and the employee stock ownership association (1.1%).

Meanwhile, investors who acquired LG CNS shares through the IPO subscription will only be eligible for dividends starting from the 2025 fiscal year.

Recently, financial authorities have been encouraging companies to adopt a "dividend-first, investment-later" approach to improve dividend policies.

Companies such as Seoul Guarantee Insurance, Redcap Tour, SK Hynix, and Hyundai Mobis have adjusted their dividend record dates to allow new shareholders to receive dividends.

However, LG CNS has chosen to adhere to the existing approach, drawing criticism from new investors.

The decline in stock price has impacted not only new investors but also LG CNS employees.

Among the 3,875,438 shares allocated to the employee stock ownership association, 81.59% (3,162,322 shares) were subscribed to by employees, amounting to approximately KRW 195.7 billion based on the IPO price.

These shares are subject to a one-year lock-up period, preventing employees from selling them.

As a result, employees must bear the risk of further losses while waiting for a stock price rebound.

One employee voiced concerns, saying, "I subscribed to the employee stock ownership plan because I believed in the company's growth, but given the current situation, my expectations have crumbled. Instead of fostering a sense of loyalty, this has placed a financial burden on employees."

Despite going public through this IPO, LG CNS opted for a dividend policy that did not consider new shareholders, potentially impacting its corporate trustworthiness.

Additionally, Macquarie Infrastructure Asset Management, the second-largest shareholder, recouped approximately KRW 600 billion through the IPO, increasing the circulating supply of shares, which has been cited as a major factor behind the stock price decline.

If Macquarie proceeds with further sell-offs after its six-month lock-up period expires, there is a risk of further downward pressure on the stock.

As frustration grows among IPO investors and employee shareholders, attention is now focused on what shareholder policies LG CNS will implement in the future.


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LG CNS Faces Dual Woes, IPO Investors Excluded from Dividends, Stock Price Drops