Plans by Korea's mid-sized corporations to raise funds by listing (IPO) core subsidiaries have hit a snag after the government recently applied stricter standards to duplicate listings.
A duplicate listing means listing a core subsidiary on the stock market when the parent company is already listed. Concerns have been consistently raised that this process can create conflicts of interest between parent and subsidiary shareholders and lead to losses for retail investors, including a drop in the parent's stock price.
The Korea Exchange (KRX) has prepared guidelines centered on operational independence, management independence, and shareholder communication, and is strengthening reviews to restrict duplicate listings in principle. Because of this change, mid-sized corporations that sought to raise funds and expand their businesses through listings are discussing the possibility of revising plans or delaying timelines.
The shipping and port IT solution company "CyberLogitec," which had been pursuing a listing, recently began a reassessment. The company is a core subsidiary of Eusu Holdings (formerly Hanjin Shipping Holdings), which was separated from Hanjin Group, and is led by Chair Choi Eun-young. Choi is the spouse of the late former Hanjin Shipping Chair Cho Soo-ho and the aunt of Hanjin Group Chair Cho Won-tae.
Since being spun off from Hanjin Group in 2014, Eusu Holdings has shifted its structure from shipping-centered to logistics and IT-centered, and CyberLogitec has served as a key pillar of that growth. CyberLogitec applied for a preliminary listing review in 2019 but halted the process due to slowing results and valuation burdens. After recovering performance, it recorded 125.4 billion won in revenue and 32.3 billion won in operating profit last year and moved to try an IPO again.
However, with Eusu Holdings holding 53.16% equity in CyberLogitec, the duplicate listing issue is coming to the fore. Although the Korea Exchange (KRX) recently presented guidelines, the review standards remain unclear, and the company is maintaining a cautious stance on whether to proceed with the listing. A CyberLogitec official said, "We are monitoring the situation and reviewing various options, including a KOSDAQ listing."
HANCOM Group's affiliate and AI data analytics company "HANCOM InSpace," a mid-sized software corporation, also hit a roadblock in its listing attempt. HANCOM InSpace applied for a preliminary listing review in Aug. last year but received a non-approval decision in Feb. this year. With the largest shareholder HANCOM holding 28.32% equity, the duplicate listing issue has been consistently raised.
HANCOM is currently considering selling HANCOM InSpace. HANCOM InSpace was acquired in 2020 by HANCOM CEO Kim Yeon-su, the eldest daughter of HANCOM Group Chair Kim Sang-cheol, and has pursued a platform business that analyzes data collected via satellites and drones with AI. However, with continued weak performance—234 billion won in revenue and a 2.9 billion won operating loss last year—a sale is being discussed as a realistic option.
DASAN Group, a mid-sized corporation in telecom equipment led by Chair Nam Min-woo, faces a similar structural challenge. DTS, a heat exchanger manufacturer affiliated with DASAN Group, applied for a preliminary listing review in Sept. last year but has not yet received a result.
DTS has 37.69% of its equity held by KOSDAQ-listed DASAN Networks, and DASAN Networks in turn has 26.98% of its equity held by another listed company, Dasan Solueta. With a listing structure extending to subsidiaries and sub-subsidiaries, observers say it is not free from duplicate listing issues.
DTS has been preparing for a listing since 2018 and has built a base for listing through improved performance. Last year, it posted 142.7 billion won in revenue and 25 billion won in operating profit. The company said, "There is no overlap with the parent company in business or management, and we have an independent structure."
Experts agree with the intent of duplicate listing regulations but raise concerns about blanket application. A capital markets expert said, "Duplicate listing regulations are necessary to protect shareholders, but if they also restrict high-growth subsidiaries, corporations' investment capacity and industrial competitiveness could weaken," adding, "A balanced approach is needed that considers growth opportunities while securing transparent governance and shareholder protection."