KOSPI has surged past the 8,000 level and is racing toward 9,000, but a cold snap is hitting the initial public offering (IPO) market. Rather than jumping on the index rally to shore up capital, more corporations are choosing to wait or seek detours if they cannot get proper valuations. In the market, some say this is a "paradoxical cold wave" created by the government's stricter rules on duplicate listings and higher investor expectations.
According to the Korea Exchange (KRX) on the 4th, from January to June 2 this year, the number of pure general new listings excluding SPACs, REITs, and KONEX stood at just 15 corporations. That is a 57% plunge from the same period last year (35).
Public offering proceeds have also been cut in half from last year. Last year, led by big names such as LG CNS (1.1994 trillion won) and Seoul Guarantee Insurance Company (181.5 billion won), a total of 35 corporations settled on the stock market and raised about 2.1 trillion won. In contrast, the total public offering proceeds of 16 general corporations listed this year came to about 1 trillion won, roughly half of the same period last year.
Last year, four large blue chips—LG CNS, Seoul Guarantee Insurance Company, d'Alba Global, and CK Solution—entered only KOSPI (the main board), propping up the primary market. This year, however, the only new KOSPI listing was Kbank, a financial unicorn. The remaining 14 were all small and mid-caps on KOSDAQ and KOSNEC.
The core factor freezing the IPO market is seen as the financial authorities' strong stance restricting "duplicate listings (listing after a physical partitioning)." Over split listings, which in the past sparked controversy for undermining parent-company shareholder value, the Korea Exchange (KRX) and the Financial Supervisory Service are applying strict review standards. Currently, for corporations to receive a duplicate listings exception, they must meet all stringent criteria, including business and management independence and investor protection.
In fact, early this year, Essex Solutions, the U.S. affiliate of LS Group, voluntarily withdrew its preliminary listing review application in light of the duplicate listings controversy and market concerns. SK ecoplant is reportedly putting more weight on negotiating purchases of financial investor (FI) equity instead of pushing an IPO recently. CJ Olive Young is also in a situation where various governance overhaul scenarios other than an IPO are being discussed in the market. Even HD Hyundai Robotics, once considered a big catch, has reportedly effectively halted its IPO process.
As effectively the only large IPO to newly debut on the KOSPI market this year, Kbank's trajectory carried significant symbolic weight. On its first trading day in March, Kbank's shares spiked intraday to 9,880 won, raising expectations, but the price has since trended steadily downward to the 5,500-won range. That is more than 30% below the final offer price (8,300 won).
With even Kbank showing a sluggish post-listing share performance, some in the market say the dilemma for large unlisted conglomerates and unicorns has deepened.
A person in the investment banking industry said, "Corporations preparing to list are rethinking their schedules because, even if they want to lower valuations to reflect market changes, early investors oppose it, and if they try to get full value, they fear the market's cold reception."
Kang Young-hoon, a researcher at Samsung Securities, said, "Investors' interest in IPOs has grown significantly, but with a lack of KOSPI-class big names, a scarcity-premium effect is concentrating flows into small and mid-caps on KOSDAQ," adding, "As listings of unicorns and small and mid-sized unlisted corporations in growth sectors such as artificial intelligence (AI) and robots are becoming visible, the KOSDAQ IPO market's strong run is likely to continue."