Due to stock market sluggishness, the IPO market is also 'frozen'... Some companies even withdraw their listings

[Asia Economy Reporter Kwon Jae-hee] The sluggish stock market has rapidly cooled investor sentiment toward initial public offerings (IPOs). As a result, some companies have lowered their offering prices, while others have withdrawn their listings.

According to IRQudus, an IR consulting firm, and the Korea Exchange on the 8th, among the 23 companies newly listed through IPOs this year (excluding SPACs), eight set their offering prices below the lower end of the initially proposed price range.

Issuing companies determine the desired offering price range through valuation with the lead underwriter, and the final offering price is decided based on institutional investor demand forecasts conducted before the general subscription, referencing the desired price range.

About one in three companies newly listed this year lowered their price expectations during the institutional demand forecasting process.

Two companies (including REITs) finalized their offering prices within the band, while 13 companies set their final offering prices above the upper band.

This marks a complete turnaround from last year's IPO market atmosphere.

Last year, among 94 newly listed companies, 77 (82%) set their offering prices at or above the upper band. Only 12 companies (12.8%) set prices below the band.

Among the KOSDAQ-listed companies entering the market this year, five?Gongguwoman, Moa Data, Noeul, Stonebridge Ventures, and BioFDNC?finalized their offering prices 11?23% below the lower band.

The final offering prices of three companies?VC, Narae Nanotech, and Adbiotech?were set at the lower band.

Eventually, companies withdrawing or postponing their listings due to poor demand forecasts are emerging one after another.

SK Shieldus planned to list on the KOSPI this month but submitted an IPO withdrawal report to the Financial Supervisory Service on the 6th after poor demand forecasting results.

An SK Shieldus official stated, "The uncertainty in the global macroeconomic environment has intensified, sharply dampening investor sentiment. Considering market conditions, we decided to reconsider listing when the company’s value can be fully assessed."

Earlier, Hyundai Engineering and drug design specialist Voronoi also withdrew their IPO plans after low institutional investor participation in demand forecasting.

Renewable energy generation company Daemyung Energy initially aimed for a March KOSDAQ listing and submitted a securities registration statement but withdrew once and then reattempted listing with a lowered price range. The offering price band was significantly reduced from 25,000?29,000 won to 15,000?18,000 won.

With investor sentiment freezing in the IPO market, concerns are growing over potential listing disruptions for companies aiming to go public this year.

The major IPO of the first half, One Store, is scheduled for institutional demand forecasting on the 9th?10th. Concerns are rising over its continued operating losses and competition with global big tech companies within the app market.

Market Kurly filed for preliminary listing review in March but is reportedly facing difficulties during the review process due to chronic losses and unstable shareholding structure issues.

Other companies aiming for listing within the year include Socar, Hyundai Oilbank, Kakao Mobility, and CJ Olive Young.

Yu Kyung-ha, a researcher at DB Financial Investment, explained, "Due to recent macroeconomic instability, controversies over the appropriate valuation of issuing companies have increased. Valuations easily accepted last year are now often not applicable."

As global tightening continues and the stock market remains sluggish, issuing companies are affected by the significant drop in stock prices of listed companies used as valuation benchmarks.

Yu noted that newly listed companies generally operate in growth industries rather than traditional sectors, so they are directly impacted by the recent growth stock adjustments following interest rate hikes.

He added, "Many companies that applied for listing preliminary review last year have yet to receive approval. Even if these companies pass the review and go public, it will be difficult to obtain the desired valuation."

He further stated, "Given the current market atmosphere, unless there is a clear macroeconomic improvement, it will be difficult to expect a boom in the IPO market like last year. Companies are likely to either lower valuations to meet market expectations or raise funds in the unlisted market and wait for the market sentiment to improve before pursuing listing again."

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