The share price of SINSIWAY, a KOSDAQ-listed company that develops and sells databases (DB) security products, surged after the Coupang personal information leak incident. SINSIWAY drew attention on expectations that demand for DB security-related technology would grow in the wake of this case.
But on the 2nd, the next day, SINSIWAY's share price plummeted. The drop came on news that the company's largest shareholder would change as EXEM was transferring its holdings to the KOSDAQ-listed Parataxis Korea. Founder and CEO Chung Jae-hoon and co-CEO Yoo Kyung-seok also plan to transfer half of their respective equity to Parataxis Korea.
As in the SINSIWAY case, there has been an increase in cases where founders or existing management sell their equity after listing on KOSDAQ. It is positive that the structure in which founders exit by recouping investment through a listing has taken hold, but there is also criticism that uncertainties grow when the founder's seat is taken by forces whose management capabilities are not certain.
In particular, when the acquirer of management control is a no-capital mergers and acquisitions (M&A) group, they often focus on seeking short-term trading gains rather than growing the core business. In such cases, promising corporations can quickly devolve into marginal corporations, repeatedly causing losses for retail investors.
Investor concerns are high about Parataxis Korea, which is set to become SINSIWAY's new largest shareholder. Currently designated as an administrative issue, the company has repeatedly changed its name and business purpose while remaining in the red. Most recently, it put forward a bitcoin treasury business (virtual asset vault) as its main line. This comes just two years after SINSIWAY listed through a SPAC merger.
Cases in which founders or existing management suddenly hand over management control to ill-defined forces within a few years of listing are particularly frequent among corporations that entered KOSDAQ via a SPAC merger or a technology exception listing.
OptiCore, which produced communications components, saw founder and CEO Jin Jae-hyun abruptly sell management control three years after listing through a SPAC merger. The company's new largest shareholder, Black Mountain Holdings, is the personal company of Yang Ji-sung and is linked to MEDICOX, whose transaction was halted over embezzlement of company funds.
Medical device manufacturer Bistos also entered KOSDAQ via a SPAC merger, but CEO Lee Hu-jung sold equity and stepped down from management three years after listing. At the time of listing, Lee expressed an ambition to grow company revenue to the 100 billion won range by 2027, but three years after listing sold the equity to CU Medical Systems, known as a no-capital M&A group.
The industry is offering various interpretations. Above all, the difficulty of management rises sharply after listing, succession is not easy, and in such an environment it is hard for founders to resist the temptation of acquirers who approach in various ways.
A person who previously headed a listed company said, "The control premium for a KOSDAQ-listed company is typically around 5 billion won, and for a Korea Exchange main-board listed company around 10 billion won," adding, "There is no shortage of forces pushing favorable terms to encourage a sale, so founders inevitably agonize."
Moreover, there is criticism that these management-control sales are becoming more frequent as forces that once targeted only marginal corporations now set their sights even on solid, profitable technology companies.
A capital market official explained, "There is advice to vet in advance whether the party acquiring management control from the founder has sufficient financial resources and the capacity to operate the company sustainably, but in reality it is virtually impossible," adding, "Because most management-control sales happen by surprise, existing investors often find out belatedly."