This article was published on Dec. 30, 2024, at 4:32 p.m. on the CHOSUNBIZ Money Move (MM) website.
Internet-only bank K Bank's struggle with its 'initial public offering (IPO) third attempt' is deepening. After a disappointing demand forecast in October marked the failure of their second challenge following 2022, K Bank opted for a secondary listing attempt within the six-month effectiveness period of the preliminary listing review but has yet to set a timeline for re-entering the public offering process. It is said that even if they attempt a public offering again, the atmosphere in the stock market makes it difficult to be optimistic about success.
K Bank initially aimed to capitalize on the early-year momentum in which institutions release funds, but political risks and high exchange rates in the domestic market have diluted expectations. They must submit the securities registration statement by mid-January at the latest to allow for a listing within the deadline, but it appears they have not finalized the public offering structure.
According to financial investment industry sources on the 30th, K Bank has not yet determined the timing for submitting the securities registration statement. So-called billion-won IPO candidates typically discuss the submission of the securities registration statement and the start of the public offering process in advance with the Financial Supervisory Service and others; however, the discussions ended with the submission of a withdrawal statement in October.
Market expectations indicate that K Bank's third IPO attempt may be pushed back further than anticipated. After suffering a defeat in the demand forecasting aimed at institutional investors and delaying the listing schedule, K Bank now needs to provide a specific timeline to complete the listing within the effectiveness period of the preliminary listing review.
The effectiveness period for the preliminary listing review at the Korea Exchange lasts for six months from the approval date. Since K Bank received its preliminary listing review approval at the end of August, it must complete the listing by the end of February next year. Considering the roughly one-month schedule for the public offering process, it means they must submit the securities registration statement by mid-January at the latest.
There is an analysis that the contraction of the domestic stock market is obstructing K Bank's timeline confirmation for its third attempt. Specifically, political uncertainties and the weak won are creating a wait-and-see atmosphere among foreign investors, which adds pressure. For companies with billion-won valuations, participation from foreign investors is essential in the public offering process.
K Bank suffered a dismal defeat in its demand forecast targeted at institutional investors last October. It aimed to reach a minimum market capitalization of 3.9586 trillion won post-listing while proposing a hoped-for public offering price range between 9,500 won and 12,000 won, but reports indicate it couldn't meet the allocated public offering volume due to negligence from institutional investors.
It is assessed that K Bank's possibility of reducing the public offering size and lowering the offering price in line with market conditions is unlikely. Behind K Bank's listing is the withdrawal of investment funds from financial investors (FIs) such as Bain Capital, MBK Partners, MG Saemaul Geumgo, and Com2us.
It is reported that many of these FIs have proposed a baseline valuation of 4 trillion won. After the prior demand forecast, K Bank along with the listing underwriters NH Investment & Securities and KB Securities suggested setting the offering price below the lower band of 8,500 won, but opted to withdraw the proposal due to opposition from the FIs.
Industry experts are suggesting that LG CNS, which is scheduled to conduct a demand forecast for institutional investors starting Jan. 9, as the first company to list on the securities market next year, will influence K Bank's listing timeline confirmation. Above all, the participation of foreign institutional investors in the demand forecast is expected to be a key indicator.
A representative from a securities firm involved in K Bank's underwriting noted, “We deemed it a temporary market contraction and postponed the listing timeline. However, as the stock market slump continues, we have been unable to finalize discussions about the offering price and size,” adding, “We still have time until mid-January, so we are ongoing with discussions.”