"Has the IPO Price Bubble Burst?" Zero Offerings Exceeded Price Bands Last Year

FSS Releases 2025 IPO Market Data
76 Companies Listed, 4.5 Trillion Won Raised
Institutional Mandatory Holding Commitments Rise to 41%
Retail Investor Subscription Deposits Reach 780 Trillion Won

Last year, there were no cases in the initial public offering (IPO) market where the offering price was set above the desired price band. The proportion of institutional investors committing to mandatory holding periods also increased significantly. Subscription deposits from retail investors more than doubled, reaching 780 trillion won.

According to the Financial Supervisory Service on March 4, a total of 76 companies went public through IPOs last year, with total proceeds amounting to 4.5 trillion won. This figure is similar to the previous year (77 companies and 3.9 trillion won), but the total amount raised increased by 600 billion won.

In the Korea Exchange main board, 7 companies raised 2.2 trillion won, while 69 companies on the KOSDAQ market raised 2.3 trillion won through IPOs. By size, 63 small- and mid-cap IPOs with offering amounts between 10 billion won and 50 billion won accounted for 81.6% of all listings. There was one mega-IPO exceeding 1 trillion won, and the number of large IPOs exceeding 100 billion won reached the highest level since 2022.

Notably, last year saw a structural shift in the IPO market, with the offering price for all companies determined within the desired price band, reflecting the regulatory authority's ongoing reforms. In contrast, as recently as 2024, aggressive pricing by institutions resulted in offering prices exceeding the band in 66% of all IPOs. A Financial Supervisory Service official commented, "This is attributable to improvements in the demand forecasting system and underwriting practices, which have been implemented to enhance the rationality of offering price determination and are now taking root in the market."

However, as the stock market surged in the second half of the year, there was a clear trend of offering prices being set at the upper end of the band for 97% of listings, indicating a growing concentration at the top of the price range.

The percentage of institutional investors' allocations subject to mandatory holding commitments also increased sharply. The proportion of such commitments among institutional allocations was 41%, up by 22.9 percentage points from the previous year (18.1%). This surpasses the level seen during the IPO boom in 2021. By market, the main board recorded 54.9% (up 13.6 percentage points), while KOSDAQ reached 39.6% (up 23.8 percentage points). A Financial Supervisory Service official explained, "There is a decrease in participation for short-term profit-taking, and a gradual expansion of mid- to long-term investment practices."

Retail investor sentiment towards IPO investment also appears to have recovered substantially. The average subscription competition ratio for retail investors was 1,106 to 1, approaching the 2021 boom level of 1,136 to 1. As a result, subscription deposits more than doubled to 780 trillion won from 355 trillion won the previous year. A Financial Supervisory Service official stated, "While the IPO market was somewhat subdued in the first half, it experienced rapid growth in the second half thanks to the bullish stock market, and key subscription metrics in the fourth quarter surged to twice the level of the first quarter." The competition ratio in the fourth quarter soared as high as 1,379 to 1.

Additionally, the average return on the first trading day—both opening price (92%) and closing price (75%) compared to the offering price—reached the highest level in the past five years, buoyed by the overall stock market rally. In particular, IPOs in the fourth quarter, which saw a substantial increase in institutional mandatory holding commitments, enjoyed a sharp rise in returns, with the opening price reaching 153% of the offering price.

The Financial Supervisory Service plans to continue monitoring the effectiveness of recent regulatory reforms to enhance fairness and rationality in the IPO market and strengthen investor protection, while maintaining ongoing communication with the market. An official from the Financial Supervisory Service emphasized, "In 2025, the IPO market showed positive signs such as price normalization, an increase in long-term investment, and a recovery in investor sentiment. We will continue to listen to the market and pursue further institutional improvements to ensure these changes take root from a long-term perspective."

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