Korea’s initial public offering (IPO) pipeline has dried up as aspiring candidates give up their bid upon witnessing disappointing results of earlier offerings this year.
According to the Korea Exchange on Thursday, shares of 36 companies that newly joined local stock exchanges this year – two on the main Kospi and 34 on the junior Kosdaq – have lost 5.5 percent on average against their IPO prices as of Wednesday, with stock prices of 23 companies dipped below their IPO value.
Such poor performance of newcomers to the stock market has further dampened demand for future IPOs planned for later this year, resulting in lukewarm responses during their book-building sessions in recent weeks.
Last month, six companies tapped demand from institutional investors and four of them had to settle for IPO prices below desired price band due to tepid interest. In particular, bio-tech company Olipass Corp. and automotive communication solution provider Ranix Inc. ready to move up to the Kosdaq through a special track had to price their stocks significantly below their initial target price band.
The new entrants’ underperformance also has made those readying for IPO to rethink their plan. Only 11 companies applied for preliminary IPO review in August, down 30 percent compared with the same month last year. Content creator CarrieSoft called off its IPO process even after running a book building session.
Vitality may return after big-sized IPOs, including Lotte REIT and Hanwha Systems next month.
By Chung Seung-hwan and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]