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Korean financial institutions have begun to examine whether LG Chem Ltd.’s scheme to demerge its battery unit would impair the value of their holdings in the parent company, joining retail investors’ jitters about their asset value after the separation of the burgeoning battery business.

NH-Amundi Asset Management Co. with stake in LG Chem via multiple funds under its operation has embarked on a review the impact of the demerger of LG Chem’s battery unit on stock value, according to sources from the financial investment industry on Wednesday. But it fell short of sending a notification letter to the company, sources said.

“It is still our duty as an asset manager to look into the possible impact of the reorganization scheme, although we decided not to send a formal letter to LG Chem,” an official from NH-Amundi said.

Market watchers expect similar moves from institutional players.

Shares of LG Chem has lost 13.2 percent since Sept. 16, when the company first announced the plan to spin off its most promising battery making unit by Dec.1 amid selloffs by angry investors who had invested heavily in the company primarily on the battery outlook.

LG Chem's retail investors are especially upset about the plan, arguing their stockholding value will get diluted when the separated battery entity goes public.

In order to appease worried investors, LG Chem’s chief financial officer Cha Dong-seok said last Friday that the initial public offering of the new battery unit will not be conducted earlier than early 2022 and maintain controlling stake of minimum 70 percent in the subsidiary so that any benefit will translation onto the parent.

On Thursday, LG Chem fell 3.02 percent to close at 611,000 won ($522.58) in Seoul.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]