Last Year's IPO Public Offering Size Up 23% Year-on-Year... "Largest Technology Special Listing"

Total of 73 IPO Companies... 5% Decrease from Previous Year
21 Technology Special Listing Companies, 'Highest' Since Introduction

[Asia Economy Reporter Minji Lee] Last year, the number of companies entering the domestic stock market through special exemption systems increased in the initial public offering (IPO) market. The number of companies that went public over the year slightly decreased compared to the previous year, while the amount raised through public offerings significantly increased.

According to the "2019 IPO Market Analysis and Precautions for Investing in Public Offering Stocks" released by the Financial Supervisory Service on the 19th, a total of 73 companies (7 on KOSPI, 66 on KOSDAQ) went public last year. This represents a 5% (4 companies) decrease compared to the previous year (77 companies). The public offering scale recorded 3.2 trillion KRW, a 23% increase from the previous year (2.6 trillion KRW), due to an increase in companies listed on the securities market.

The industries were mainly manufacturing (31 companies), pharmaceuticals and bio (17 companies), and software development and supply (11 companies). Among foreign companies, only one Japanese company, SNK, was listed.

Last year, the IPO market saw a significant increase in companies listed using special exemption systems such as venture companies with technological growth and unrealized profits.

A total of 21 companies went public through the technological growth special exemption system, marking the highest level since the introduction of the technology evaluation exemption system in 2005. It was analyzed that companies went public through various listing tracks such as technology evaluation (14 companies), business model evaluation (2 companies), and growth recommendation (5 companies).

Two pharmaceutical and bio companies, including Zetema, were listed through the unrealized profit special exemption listing system. Metalife was the first company to be listed through the materials, parts, and equipment (SoBuJang) special exemption system. The SoBuJang special exemption system was introduced in September last year to support materials, parts, and equipment companies following trade conflicts with Japan.

A total of three companies, including Lapas, exercised their redemption rights. General subscribers of unrealized profit and growth recommendation companies can exercise redemption rights (at least 90% of the public offering price) to the lead underwriter for 3 months and 6 months respectively from the listing date if the stock price falls below the public offering price.

The demand forecast competition rate significantly increased for both KOSPI and KOSDAQ compared to the previous year. In the KOSDAQ market, the competition rate rose from 488:1 to 615:1. For KOSPI, it increased from 55:1 to 417:1. The proportion of final public offering prices decided above the upper limit of the desired price band was 65.7% (48 companies in total), higher than last year's 51.9%.

Last year's public offering stock investment performance was relatively sluggish. On the listing day, the stock price rose by an average of 27.5% compared to the public offering price, but the year-end closing price only increased by 9.2%. In particular, the year-end closing price of KOSDAQ companies rose by 7.3%, but 31 companies had year-end closing prices lower than their public offering prices.

Ahn Seung-geun, team leader of the Disclosure Review Office at the Financial Supervisory Service, said, "We will encourage thorough due diligence and disclosure regarding investment risk factors and the public offering price determination process for underwriters and public offering companies," adding, "Guidance for listed companies and strengthening the review of securities registration statements are necessary."

This content was produced with the assistance of AI translation services.