Government to Relaunch Cornerstone Investment System Initiative

The government is set to reintroduce the 'Cornerstone Investor' system, which allocates a certain portion of shares of companies preparing for listing to institutional investors.

According to sources inside and outside the financial authorities on the 9th, the Financial Services Commission is expected to announce plans to re-promote the Cornerstone Investor system within the first quarter of this year. This is to prevent situations where short-term profit-seeking trades flood in immediately after listing, causing the stock price to surge sharply and then fall again.

Yonhap News

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The Cornerstone Investor system is an investment contract in which large institutional investors agree to invest a certain amount for the long term without knowing the public offering price before the sale of public offering shares, and in return, are allocated a portion of the public offering shares.

The Cornerstone Investor system was first discussed in Korea in 2017, and its introduction has been highlighted for its advantages in promoting long-term investment in public offering shares and enhancing the reliability of the public offering price.

Meanwhile, the financial authorities are also reportedly considering strengthening the mandatory holding requirements for pre-acquired shares when IPO underwriters invest in companies planning an IPO in advance, compared to the current standards.

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