Ransom 1.5 Trillion Padoo... Will the IPO Market's 'Big Fish' Break the Success Streak?

Subscription Competition Rate for General Public at 80 to 1, Subscription Deposit Only 1.93 Trillion Won
Volatility Expansion on Listing Day Leads to Rapid Cooling in Market Sentiment After One Month
New Stocks Close First Day Trading with Consecutive Declines from IPO Price

With numerous major initial public offerings (IPOs) scheduled for the second half of this year, Padoo is set to be listed with a market capitalization approaching 1.5 trillion KRW based on its offering price. Depending on Padoo's stock price performance after listing, the debut schedules of trillion-won companies such as Ecopro Materials, Doosan Robotics, and NICE Information Service are expected to be either advanced or postponed.

According to the financial investment industry, Padoo has set its offering price at 31,000 KRW and plans to raise 193.8 billion KRW. Based on the offering price, Padoo's market capitalization is 1.4898 trillion KRW. This marks the first time in 11 months since WCP's listing in September last year that a company with a trillion-won valuation has entered the domestic stock market.

During the two-day book-building process for institutional investors from the 24th to the 25th, the subscription competition rate reached 362.9 to 1. The proportion of institutions willing to subscribe at prices above the upper limit of the offering price range, 31,000 KRW, was 84.4%. A representative from NH Investment & Securities, the lead underwriter, explained, "There is strong market interest in the data center sector," adding, "Padoo's technology, which supplies semiconductors for data centers to major overseas clients, appears to have received favorable evaluations from institutional investors."

Since the 26th of last month, the expansion of price fluctuation on the listing day has increased the profitability of IPO investments, which seems to have influenced the book-building results. Securecen, which was listed on the KOSDAQ market on the 29th of last month, rose 205% on its first day. Openall (57.5%), Almek (99.0%), Innosimulation (133.3%), Phil Energy (237.1%), and Sensorview (51.8%) also recorded significant gains compared to their offering prices on their first trading day.

Amid growing interest in the IPO market, Padoo's confirmation of a high offering price during book-building has strengthened optimism that major companies will continue to enter the market one after another. However, the atmosphere in the IPO market changed starting with the listing of Vernect on the 26th.

When Vernect set its offering price and conducted subscription for general investors, the IPO market was still hot. The two-day book-building from the 10th to the 11th recorded a competition rate of 1,824 to 1. The offering price was fixed at 16,000 KRW, exceeding the expected range of 11,500 to 13,600 KRW. The subscription for general investors also attracted 5 trillion KRW in deposits, continuing its strong performance. Despite high interest, Vernect closed trading at 11,700 KRW, down 26.9% from the offering price.

Following Vernect, Pharos iBio and ALT were listed on the 27th. Pharos iBio fell 37.6% from its offering price, and ALT dropped 9.8%.

The consecutive closings below the offering price affected Padoo's subscription competition rate as well. The general investor subscription conducted over two days from the 27th recorded a competition rate of 80 to 1. The subscription deposits amounted to about 1.93 trillion KRW, which was low compared to the 16 trillion KRW raised by secondary battery equipment maker Phil Energy, the largest deposit amount this year. The atmosphere was notably different from MI Cube, which conducted its subscription a day earlier and attracted 3 trillion KRW in deposits with a competition rate of 1,695 to 1.

Choi Jong-kyung, a researcher at Heungkuk Securities, explained, "When newly listed companies record high average returns, as in 2009, 2014, and 2020, funds flow into the IPO market," adding, "The increased funds flow into the market the following year, and offering prices tend to rise." He continued, "A cyclical pattern emerges where higher offering prices lead to lower stock returns," and "This cycle repeats with lower IPO returns followed by cheaper offering prices and profitable returns."

An investment banking (IB) industry official analyzed, "Although the large price fluctuations on the listing day attracted attention, a pattern of stock price decline from the following day was established," adding, "Investors who saw the stock close below the offering price on the listing day likely became more cautious about investing in IPO stocks."

Recently, caution toward the IPO market, which had been heating up over the past month, has increased. This could affect the offering prices of major companies preparing for listing, such as Doosan Robotics, SGI Seoul Guarantee Insurance, and Ecopro Materials. Doosan Robotics completed its preliminary listing examination application on the 9th of last month. The IB industry expects it to be listed around September. Its corporate value is estimated to be around 1.5 trillion KRW. Depending on the listing results of Doosan Robotics and others following Padoo, the atmosphere of the major IPO market in the second half of this year is likely to be influenced. If Padoo's stock price falls significantly below the offering price after listing, the listing schedules of major IPOs could be delayed again.

Oh Kwang-young, a researcher at Shin Young Securities, said, "Major companies attracting investor interest, such as Doosan Robotics, Seoul Guarantee Insurance, Ecopro Materials, No Brand, and NICE Information Service, have filed IPO applications," adding, "There are also many companies with potential listings, including Oasis, K Bank, LG CNS, SK Ecoplant, Kurly, Hyundai Oilbank, SSG.com, Kakao Mobility, CJ Olive Young, 11st, Musinsa, and Yanolja." He added, "Once the listing procedures for these high-profile large IPOs begin, they will act as a black hole for IPO investment funds," warning, "This could negatively impact the supply and demand in the IPO market, so caution is advised."

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