The number of newly listed companies that entered the domestic stock market in the first quarter of this year was the lowest in the past five years. After regulations on duplicate listings were tightened to protect ordinary shareholders, the bar for going public rose sharply.
However, as the financial authorities have signaled a "many births, many deaths" structure that lowers the bar for growth companies to enter the market while delisting insolvent ones, the initial public offering (IPO) market is expected to regain momentum once the relevant system is overhauled.
According to the Korea Exchange (KRX) on the 10th, there were nine new listings in the first quarter of this year (January–March). On the Korea Exchange's main board, only Kbank listed, and the remaining eight corporations, including IMBiologics, listed on the KOSDAQ market.
This is the lowest number of first-quarter new listings in the past five years. In the first quarter of last year, 24 companies went public, and from 2022 to 2024, between 14 and 20 companies listed each year.
The sharp decline in new listings in the first quarter is believed to be due to stricter regulations on duplicate listings amid ongoing improvements to the IPO framework.
First, the authorities' IPO screening has become more stringent than before. After the so-called "inflated listing" controversy sparked by the "FADU incident," the authorities pursued measures to improve the IPO system.
Through the reforms, the authorities pushed to introduce the following: priority allocation for lockup commitments; restrictions on demand forecasts by small private equity firms and investment advisory firms; and continued introduction of cornerstone investors and pre-IPO demand forecasts. Except for the "continued introduction of cornerstone investors," which requires legal amendments, all other measures are in effect. This stance is being reflected in the Korea Exchange (KRX)'s screening process.
Stricter regulations on duplicate listings also appear to have affected IPO performance. After collecting industry feedback, the authorities plan to prepare a system on duplicate listings at the end of this month. The Korea Exchange (KRX) plans to hold a seminar on duplicate listings on the 16th of this month.
Although IPOs have slowed for now, there is an outlook that the IPO market will regain vitality after the related system is established. That is because the financial authorities said they would improve Korea's stock market, especially the KOSDAQ market, into a "many births, many deaths" structure. The financial authorities are pushing for improvements to the listing system that will lower the bar for growth corporations to increase the number of listed companies, while quickly removing insolvent companies.
A Korea Exchange (KRX) official said, "Screening, by analogy, is about choosing products worthy of being put on the market, so we cannot be lax in our review," adding, "Under the 'many births, many deaths' structure, we will not look only at financial statements; even if the size or performance is modest, if we judge the growth potential to be high, we will actively assess the corporation's potential to list."