"Ice-Thin Stock Market and Strict Hurdles" IPO Drought Concerns... Surge in Listing Withdrawals and Delays

Chilly Investor Sentiment in IPO Market Amid Global and Domestic Stock Market Slump

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[Asia Economy Reporter Lee Seon-ae] As the stock market stagnates due to interest rate hikes, tightening policies, and the Russia-Ukraine conflict, withdrawals and delays of initial public offerings (IPOs) are flooding the market. In the pharmaceutical and bio sectors, fears are widespread that companies will not clear the listing hurdle as the Korea Exchange has tightened its listing reviews following a series of recent embezzlement and breach of trust incidents. Accordingly, the IPO market, which set a record high last year, is expected to shrink and stagnate this year in terms of the number of companies and the scale of public offerings.

According to the financial investment industry on the 24th, following the withdrawal of Hyundai Engineering, which was considered a major IPO candidate this year, another major player, SM Shipping, also halted its listing efforts. Although it passed the preliminary listing review by the Korea Exchange at the end of September last year and planned to list in November, it withdrew the general public offering schedule due to poor institutional demand forecasts. The validity of the Korea Exchange’s listing review will remain until the end of March, but the possibility of resuming the listing process is low. This is based on the judgment that despite clear improvements in performance, the company will not receive sufficient valuation in the current market. SM Shipping’s hoped-for public offering price last year was between 18,000 KRW and 25,000 KRW, estimating a market capitalization of 1.523 trillion KRW to 2.115 trillion KRW immediately after listing. An industry insider familiar with SM Shipping said, “SM Shipping aims for a higher corporate value, even up to 3 trillion KRW,” adding, “Since they are confident in this year’s performance, they plan to reattempt listing later to receive a higher valuation.”

Withdrawals of quality small and medium-sized enterprises (SMEs) from listing are also on the rise. Recently, small and mid-sized public offerings such as BioFDNC and Inka Financial Services failed to attract sufficient demand in forecasts, leading them to decide that there is no need to insist on or rush their stock market debut.

Mico Ceramics withdrew its preliminary listing review request just over two months after applying to the Korea Exchange in December last year. They plan to reconsider the timing of listing to receive a proper valuation based on improved performance this year. Future Medicine also withdrew its preliminary listing review request, stating it will re-challenge listing at a time that maximizes corporate value. In January, Korea Institute of Drug Research and Fine Medics withdrew their preliminary listing review requests. It is interpreted that the Korea Exchange’s strengthened listing reviews for bio companies, following embezzlement and breach of trust issues involving Osstem Implant and SillaJen, influenced these decisions.

Although many pharmaceutical and bio companies were expected to pursue IPOs this year, except for Shaperon, which has applied for preliminary listing review, no additional applications have been made. Overall, the pharmaceutical and bio market is shrinking, and investor sentiment suggests that good results will not be achieved in IPOs. In fact, companies that listed this year, such as Advantec and BioFDNC, recorded poor results in demand forecasts and subscriptions, and their stock prices have since fallen below the offering price.

SSG.com, Kurly (Market Kurly), Oasis Market (Oasis), the three major dawn delivery companies, and CJ Olive Young are also taking a conservative approach to their listing timing. Although they have not expressed intentions to withdraw their listings, they plan to proceed while monitoring market trends to ensure successful offerings. Essentially, they intend to build strength before listing without being bound by timing, so whether they will list this year remains uncertain.

Kyobo Life Insurance recently lost a legal dispute with financial investors, raising concerns that its planned IPO schedule may face setbacks.

The Korea Institute of Finance forecasted, “With the trend of rising interest rates causing international and domestic stock markets to shrink, the number of companies attempting IPOs is likely to decrease.” Na Seung-doo, a researcher at SK Securities, advised, “Since last year’s IPO market attracted large-scale funds and raised returns and valuations, a more conservative approach is appropriate at this time when market tightening is likely.”

Meanwhile, last year’s domestic IPO market set a record high. The total public offering amount surged 333.9% from 4.5426 trillion KRW the previous year to 19.7084 trillion KRW. The number of companies conducting IPOs also increased by 27.1% from 70 to 89 during the same period.

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