K Bank Also Crossed the 'Listing Threshold', but the Pace Is 'Painful'... IPO Darkened by Box Office Flop

[Asia Economy Reporter Lee Seon-ae] Internet bank K-Bank has finally passed the preliminary listing review by the Korea Exchange, the first hurdle for listing on the KOSPI, entering the countdown to its stock market debut. However, it remains to be seen whether the initial public offering (IPO) schedule will accelerate. Investor sentiment has deteriorated sharply as even secondary battery companies, which had been performing well despite the recent contraction in the IPO market, have failed to attract interest. Accordingly, despite K-Bank's intention to complete its IPO within this year, it may postpone the actual public offering to next year due to the market downturn making it difficult to receive a proper valuation. Major companies like Kurly, which have passed the listing threshold, are also facing difficulties guaranteeing successful IPOs amid market contraction, leading to considerable concerns about their listing schedules.

K-Bank's Corporate Value of 7 Trillion Won 'A Star in the Sky'

The Korea Exchange announced on the 20th that it has confirmed K-Bank's eligibility for listing on the securities market following the preliminary review.

K-Bank, established in 2016, is the 'first domestic internet bank.' Its largest shareholder is BC Card, a subsidiary of KT, holding a 33.72% stake. In the first half of this year alone, it earned 45.7 billion won, double last year's annual net profit of 22.5 billion won.

If on schedule, K-Bank is expected to complete its KOSPI listing by March next year, but its goal is to finalize the listing within this year to quickly increase its lending capacity. This is because the 725 billion won invested by MBK Partners, Bain Capital, and MG Saemaeul Geumgo last year can be recognized as capital under the Bank for International Settlements (BIS) standards.

Previously, the Financial Supervisory Service issued an authoritative interpretation stating that the shares held by these companies could not be considered capital under BIS standards. This is because if K-Bank fails to list by 2026, the largest shareholder BC Card is obligated to repurchase the shares under the drag-along rights.

As of the end of June, K-Bank's BIS capital adequacy ratio stood at 15.86%, close to the financial authorities' recommended level of 14%. To compete in lending with rivals, it must have the drag-along condition removed and have the capital recognized.

Accordingly, K-Bank planned to proceed with the public offering process, including demand forecasting and general subscription, as soon as it passed the exchange's preliminary review. However, the recent deterioration in capital market investor sentiment poses an obstacle. The recent sharp decline in the stock price of KakaoBank, another internet-only bank, also contributes to the worsening investor sentiment. In reality, the company cannot expect to receive the corporate value it desires. Ultimately, a decision to accept a discounted corporate value and proceed with the listing within this year is necessary for the IPO to occur this year. This means that the overall corporate value increase the group aimed for through K-Bank's listing must be abandoned. The investment banking industry estimates K-Bank's valuation at around 4 trillion won. Kim Hong-sik, a researcher at Hana Securities, said, "The KT management's goal is at least 7 trillion won or more, so there seems to be no reason to pursue a listing at a low price."

K-Bank stated, "We will flexibly decide the timing of submitting the securities registration statement considering the overall market situation."

IPO Investor Sentiment Worsens... Major Players Face Deep Concerns

The current IPO market is extremely contracted. Even sectors that attracted market attention, such as REITs and secondary batteries, continue to experience failures in attracting interest.

KB Star REITs closed on the 16th with a subscription rate of 2.06 to 1. The number of subscriptions was about 34,000, with subscription deposits totaling approximately 55 billion won. The institutional demand forecast competition rate for KB Star REITs conducted earlier was also only 26.19 to 1. KB Star REITs, a REIT based on European office real estate assets, drew attention by proposing an annual dividend yield target of about 7.76%. However, concerns grew that rising interest rates would increase financial costs for REITs, potentially worsening dividend yields and investment stability, leading to its failure to attract interest.

Double UCP, the second-largest domestic secondary battery separator manufacturer following SK IE Technology, which had attracted attention even before its listing, suffered a disastrous demand forecast. From the 14th, during the demand forecast for institutional investors, Double UCP proposed a desired public offering price of 80,000 to 100,000 won, but most institutions reportedly offered prices in the 60,000 won range. On the 19th, the public offering price was set at 60,000 won, and general subscription began for two days. However, according to KB Securities and Shinhan Financial Investment, which are managing the listing, a total of 759 domestic and foreign institutions participated in the demand forecast, recording a competition rate of 33.28 to 1. Considering Double UCP is a specialized secondary battery company that had been attracting interest, this poor performance is interpreted as a practical failure to attract interest.

More companies are surrendering one after another. As difficulties are expected until the final listing, many are lowering their valuation compared to the time of submitting the securities registration statement, reducing secondary share sales, and proceeding with 100% new share offerings. Alpi Bio, Pintel, Top Material, and Shaperon are conducting public offerings with 100% new shares without secondary share sales. Model Solution lowered its public offering price. Kurly, considered a major player in the second half, is also deeply concerned. Although confident that the listing schedule would proceed without issues, it is now reconsidering the schedule as it cannot guarantee a successful IPO.

Lee Kyung-eun, a researcher at KB Securities, predicted, "Considering the numerous IPO withdrawals and delays this year, if a company does not receive a favorable evaluation during demand forecasting or if urgent fundraising through listing is not necessary, the listing timing may be postponed."

Accordingly, contraction of the IPO market this year is inevitable. A total of 50 companies proceeded with listings by the first half of the year, and excluding 16 SPACs, 34 companies entered the stock market. Excluding KONEX companies, 48 companies were listed, down from 59 in the same period last year. Since investment sentiment is unlikely to recover in the second half, a decrease in the number of listed companies on an annual basis is unavoidable.

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