This article was published on Aug. 1, 2025, at 6:00 a.m. on the ChosunBiz MoneyMove site.
There were no preliminary listing companies that entered the public offering process in July. Since the new demand forecasting system, which significantly increased the share of mandatory holding commitments for institutional investors, was implemented on the 1st of last month, corporations have appeared to adopt a wait-and-see approach to avoid being the first cases of regulatory application.
According to the financial investment industry on the 1st, there were '0 companies' that submitted securities registration statements to the Financial Supervisory Service last month. This contrasts with nine companies, including Daehan Shipbuilding, G2GBIO, and JPI Healthcare, that entered the public offering process in June. In the case of Daehan Shipbuilding, it gained attention for submitting the securities registration statement just one day after passing the preliminary listing review.
The listing process involves submitting a preliminary listing review request to the Korea Exchange, obtaining approval, and then filing the securities registration statement with the Financial Supervisory Service. The securities registration statement serves as the first channel for conveying information to investors ahead of demand forecasting for institutional investors, determining the offering price, and public subscription for general investors.
Despite receiving preliminary listing approval from the Korea Exchange, corporations are delaying the submission of securities registration statements due to the amended demand forecasting system implemented this month. This is because the tightening of mandatory holding regulations for institutional investors and listing underwriters was implemented last month, and it applies to corporations submitting securities registration statements from July 1 onwards.
The amended demand forecasting system stipulates that more than 40% (30% this year as a temporary measure) of the offering amount allocated to institutional investors must be prioritized for corporations that voluntarily commit to lock-up. If the lock-up amount falls below the standard, the listing underwriter must hold 1% of the offering amount (with a cap of 3 billion won) for more than six months.
This revised demand forecasting system was initiated to improve the trading practices of institutional investors who aim for short-term profits by massively selling off public shares on the day of listing.
However, from the perspective of the securities firm in charge of the listing, the burden of underwriting the public shares is unavoidable, and preliminary listing companies may find themselves adjusting the offering price downward to match the lock-up proportion. Thus, the new demand forecasting system has become an important variable affecting the overall listing strategies of corporations.
Among the listing underwriters, Kiwoom Securities is particularly reported to be anxious about the side effects of this amended system. Kiwoom Securities listed one case of Dowooinsys this year, but the lock-up ratio for institutional investors during demand forecasting was relatively low at 2.7%. If sufficient lock-up is not secured, Kiwoom Securities will have to significantly increase the amount it underwrites.
For this reason, the IPO market has entered a blank period. This contrasts with the wave of securities registration statements that emerged just before the amended system was implemented at the end of June. Both Hanla Cast, an automotive parts company, and S2W, a data analysis company, submitted securities registration statements in June after receiving approval for their preliminary listing review on June 24.
In contrast, companies that received preliminary listing approval last month are maintaining a wait-and-see posture. For instance, Curiosis, which received preliminary listing approval on the 8th of last month, has not submitted a securities registration statement for over three weeks. This is due to concerns that the amount of lock-up for institutional investors may be low as it pursues a technology exception listing without realized profits.
An official from the securities industry stated, "The validity of preliminary listing approval is six months, so as long as they complete the listing within that period, I understand that Curiosis has postponed its securities registration statement submission to after mid-month. Delaying the submission will require them to reflect the second-quarter results, which is cumbersome and carries uncertainty, but still, everyone seems to be trying to avoid being the 'first case under the new system.'"
Some in the industry believe that the wait-and-see attitude of IPO market participants will continue for the time being. This is because the demand forecasting success of Nota, which passed the preliminary listing review on the 29th of last month following Curiosis, is seen as challenging. Last year's revenue was 8.4 billion won, falling short of 10 billion won, while the net loss for the period reached 24.9 billion won.
Nevertheless, the fact that the domestic stock market continues to thrive is a positive factor for the IPO market. Thanks to an overall improvement in investment sentiment, listed corporations can now expect higher valuations, which could encourage preliminary listing companies. It was recorded that the average stock price increase rate on the first day of listing for seven companies (excluding SPACs and REITs) that were listed on the Korea Composite Stock Price Index and KOSDAQ last month was 50.6% compared to the offering price.
An executive in charge of IPOs at a securities firm said, "Among general listings, not technology exception listings that price based on future performance, large securities firms are likely to open the first door (after the system's revision). It is only when one or two listings proceed under the revised system that the public offering process for preliminary listing companies will begin to increase significantly."