The semiconductor equipment company KoMiCo's 'valuable subsidiary' MiCo Ceramics is weighing down the parent company's stock price. This is because MiCo Ceramics, which was established through a physical partitioning from MiCo five years ago and became a subsidiary of KoMiCo, keeps the possibility of going public open. Investors recall the case where LG Chem immediately listed LG Energy Solution, its battery division that was core at the time, after a physical partitioning.
As shareholders raised their voices, MiCo Ceramics noted, "We are not launching an IPO immediately," while stating, "We are reviewing all possibilities regarding the public offering."
MiCo Ceramics is gaining more attention due to the fact that it will exit the 'five-year partitioning rule' this year. The Korea Exchange applies strengthened listing review standards when a newly established company that was partitioned is listed within five years. The company faces a significant burden if the review standards are tightened due to the fact that it was partitioned, especially in an environment where listings have already become more challenging. As a result, most partitioned companies are planning their schedules to go public five years after the partitioning.
In fact, MiCo Ceramics attempted to list on the KOSDAQ market in 2022 after being partitioned from MiCo but withdrew. At the time, the authorities introduced strengthened listing regulations due to the controversy that the parent company's minority shareholders suffered significantly from the listing of LG Energy Solution.
However, once five years have passed since MiCo Ceramics was partitioned this year, these standards will be relaxed. MiCo Ceramics was partitioned in 2020. This could allow MiCo Ceramics to escape the tightened listing review requirements stemming from the partitioning, raising the possibility of its re-listing.
Regarding this, a company official stated, "We are reviewing all possibilities regarding the listing," adding that there are no specific procedures currently being undertaken for the listing. KB Securities, which was selected as the lead manager for MiCo Ceramics' past listing preparation, also commented, "There are no specific details currently being processed regarding the re-listing."
As the business grows, the demand for financing has increased, and regarding the company's lukewarm stance on going public, there are claims that it is related to major shareholders' change from MiCo to KoMiCo. In 2023, MiCo sold 47.84% of its equity in MiCo Ceramics to its subsidiary KoMiCo. This was part of a management efficiency restructuring, and thus, a vertical integration from MiCo to KoMiCo and then to MiCo Ceramics has occurred.
If MiCo Ceramics goes public, it would mean that KoMiCo's valuable subsidiary is listing just two years after acquisition. Kim Kwang-jin, a researcher at Hanwha Investment & Securities, stated, "Considering the possibility of the listing of the consolidated subsidiary MiCo Ceramics, the stock price of KoMiCo can only be evaluated conservatively."
There is a strong voice of dissatisfaction from within the company. This is because it cannot avoid the issue of duplicate listings and the ensuing decline in the parent company’s stock price. An internal contact at KoMiCo stated, "Unlike the major shareholders, the employees and shareholders are opposed to the listing of MiCo Ceramics."
The issue of duplicate listings weighing on stock prices also applies to MiCo, KoMiCo's parent company. This is because another subsidiary of MiCo, MiCo Power, has also announced plans to go public. MiCo Power, which manufactures solid oxide fuel cells (SOFC), was established via partitioning from MiCo in 2021, with a goal of going public by 2027.
Experts advise that companies expected to face listing issues after physical partitioning, like MiCo Group, should be cautious. Many companies undertook physical partitioning before the authorities tightened regulations regarding cases of listing after partitioning in 2022.
SK Innovation split its battery business and launched SK On, and SK Telecom and HL Mando each physically partitioned to establish T Map Mobility and Mando Mobility Solutions, respectively. LG Electronics' electric vehicle powertrain business has been spun off as LG Magna, while HD Hyundai's robotics business has been partitioned as Hyundai Robotics.
However, it seems that the fear regarding the listing of these large-cap stocks will intensify next year. HD Hyundai Robotics is set to report next May, while T Map Mobility and LG Magna are scheduled for October and December, respectively. Mando Mobility Solutions and SK On will see their 'five-year rule' expire in September and October 2026.
In this context, Kim Jong-young, a researcher at IBK Securities, stated, "For the ideal recovery of the domestic stock market, corporations must eliminate duplicate listings through voluntary mergers," citing examples of mergers involving Meritz Financial, Meritz Securities, Meritz Fire & Marine Insurance, and Celltrion with Celltrion Healthcare.