Korea’s IPO pipeline comes to a halt as market hovers at 11-year lows

2020.03.20 14:07:12 | 2020.03.20 14:07:46

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The initial public offering pipeline came to a half in South Korea as the global virus pandemic has wrecked havocs on the market, sending key indices to the levels of 2009.

NovMetaPharma Co., a clinical-stage metabolic disease drug developer readying to move from tertiary Konex bouse to the bigger Kosdaq market, recently requested the Korea Exchange an extension of the IPO deadline due on April 30, according to financial industry sources on Thursday. When approved, it will be allowed to extend its IPO schedule by up to six months.

The drug developer passed the preliminary review for IPO on the secondary bourse in October last year and had a book building scheduled for late March, with NH Investment & Securities and Samsung Securities as lead underwriters.

But the latest financial rout induced by the COVID-19 pandemic has made the book building session virtually meaningless for now, as its IPO price would be set far below the potential value.

“During the 2008 financial meltdown, 10 some companies had IPO extended,” said a Korea Exchange official.

There currently are about nine more companies preparing for their Kosdaq debut after making the preliminary review but most of them reportedly are mulling delaying their IPOs citing the volatile market condition.

SK Biopharmaceuticals, one of potentially the biggest biotech IPOs this year, for now plans to proceed with its initial schedule of joining the country’s main Kospi bourse by June this year, according to a company official. SK Biopharmaceuticals passed the preliminary IPO review on Dec. 30, last year. NH Investment & Securities and Citi Global Market Securities are underwriters.

But market watchers are doubtful whether SK Biopharmaceuticals would carry on with the IPO on schedule as most of institutional investors currently shun away risky assets including IPOs at a time when demand for cash is so high amid the coronavirus scarce.

Most are choosing to suspend IPO plans.

LS Eve Korea, high-voltage connector maker under LS Group, recently withdrew its plan to go public on the Kosdaq. Telemarking service provider Metanet Mplatform and steel structure construction company Sen Coretech Inc., also chose to withdraw their IPOs earlier this month due to the challenging market conditions.

Despite the financial turmoil, NFC Corp., cosmetics maker completed book building last week with a plan to go public on the Kosdaq on March 26. However, its IPO is priced at 10,200 won ($8.13), the lower end of the desired band.

By Chung Seung-hwan, Park Jae-young, and Cho Jeehyun

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