Korea battery, chip companies fail to reboot IPO market

South Korea’s battery and semiconductor companies, stock investors’ favorites, failed to revive the local initial public offering market with demand for their equity market debuts weak, as sentiment remained chilly on rising interest rates amid fears of economic downturns.

W-Scope Chungju Plant Co. (WCP), a major local battery material maker, was known to consider cutting not only its IPO price but also the number of shares to be sold as institutional investors showed little interest in its listing.

The wholly-owned subsidiary of Japan’s W-Scope Corp. had targeted a market capitalization of up to 3.4 trillion won ($2.5 billion) through an IPO at a price between 80,000 and 100,000 won apiece. But most institutional investors reportedly offered to buy the shares at around 60,000 won during the Sept. 14-15 bookbuilding, according to investment banking industry sources.

WCP, which develops and produces separators, key materials of electric vehicle batteries, was understood to mull reducing the IPO price to the level, which is expected to lower its enterprise value to some 2 trillion won.

The company is scheduled to decide the price and the number of shares to be offered on Sept. 19.

Its listing, which had been expected to draw strong interest, given the rapid growth in the global EV and battery sectors, failed to alleviate investor concerns over increasing volatilities in the global stock markets amid aggressive interest rate hikes by major central banks such as the US Federal Reserve.

OPENEDGES TECHNOLOGY

WCP was not the only case that drew little interest among investors in IPOs.

Openedges Technology Inc., the country’s sole semiconductor design intellectual property company, slashed its listing price by more than 30% to 10,000 won apiece due to weak demand.

During its bookbuilding, more than 80% of institutional investors offered to purchase the shares at prices lower than the bottom end of its price guidance between 15,000 and 18,000 won. The stock was about 44.3 times oversubscribed.

Retail investors also showed lukewarm interest with the share oversubscribed by 78 times among the general public although the stock has a put-back option that allows shareholders to sell their stocks to Samsung Securities Co., the book runner for the listing when share prices fall below 90% of the IPO price.

Openedges, whose clients include semiconductor fabless companies at home and abroad, is scheduled to list on South Korea’s tech-heavy Kosdaq on Sept. 26 with a market capitalization of 280.7 billion won.

KB STAR REIT SEES WEAKEST DEMAND IN OVER TWO YEARS

KB Star Real Estate Investment Trust Inc. (KB Star REIT) of South Korea’s financial industry leader KB Financial Group saw the weakest demand for its listing from retail investors in more than two years.

KB Star REIT’s stock was only two times oversubscribed during the public subscription completed on Sept. 16, which attracted 55 billion won in deposits from retail investors. It is poised to list on the country’s main Kospi market on Oct. 6 with an expected market capitalization of 507.1 billion won.

That was the lowest oversubscription since August 2020 when the share of Koramco Energy Plus REIT was 1.5 times oversubscribed by retail investors.

Institutional investors’ demand for KB Star REIT was also weak with the stock 26.2 times oversubscribed on growing worries about rising fundraising costs amid higher interest rates.

KB Star REIT, whose base assets include Galaxy Tower in Belgium and Samsung Electronic Co.'s Europe headquarters in the UK, proposed a target dividend yield of 7.76% a year.

Write to Seok-Cheol Choi and Ye-Jin Jun at dolsoi@hankyung.com
Jongwoo Cheon edited this article.