SoCar IPO prospects murky upon disappointing institutional demand

2022.08.08 11:01:03 | 2022.08.08 11:55:27

[Source: SoCar]이미지 확대

[Source: SoCar]

South Korea’s app-based car-sharing pioneer SoCar may be discouraged to go through its defiant IPO upon meeting scanty institutional demand in last week’s bookbuilding session in another proof of jittery investor sentiment about economic prospects at home and abroad.

The company tapped institutional demand on its initial shares for pricing on Aug 4-5 with a plan to invite retail investors on Wednesday and Thursday.

It has stayed on course for IPO despite a chain of pullouts from the IPO pipeline after it successfully turned out a quarterly profit earlier in the year.

But it drew less than competition rate of 100 to one in institutional subscription, which could undercut pricing for its IPO and success rate once the shares go listed. Pricing results were due to be announced on Tuesday.

SoCar has offered initial shares at a desired price band of 34,000-45,000 won ($34.5) to raise 204.8 billion won. The offering could capitalize its circulating shares at 1.59 trillion won at the top end, exceeding industry No. 1 Lotte Rental with a market cap of 1.4 trillion won amid overvaluation issue.

The company has kept to original desired price band as it would be Korea’s first profit-making mobility platform this year, arguing the offering has been lowered from 45,170 won estimation when it sold a stake of more than 10 percent to Lotte Rental in March.

The lukewarm institutional demand would likely scare off other candidates so far remaining in the IPO pipeline for the second half such as Kurly, Kbank, Golfzon Country and Lionheart Studio.

“Despite the recent bear market rally, it is hard to predict success of IPO candidates due to lingering uncertainties. The IPO market will likely stay stagnant in the third quarter,” said Park Se-ra, an analyst at Daishin Securities.

IPO candidates may reexamine their offering and lower pricing band to add to the appeal.

“For success in the coming offerings, the pricing offering can become more important. Companies seeking for listing on the bourses will have to turn more conservative for pricing,” said Na Seung-doo, an analyst at SK securities.

By Pulse

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