Korea’s LG CNS, DN Solutions seek billions of dollars via Jan IPOs

LG CNS Co., DN Solutions Co. and other South Korean companies aim to raise billions of dollars through domestic initial public offerings (IPOs) in January 2025, betting on the belief in a seasonal increase in stock prices during the first month of each year.

LG CNS, DN Solutions, K Bank, Seoul Guarantee Insurance Co. and Lotte Global Logistics Co. plan to go public in the first quarter, investment banking industry sources said on Friday.

LG CNS, DN Solutions, K Bank and Seoul Guarantee Insurance are targeting IPOs in January on the hypothesis that there is a seasonal anomaly in the financial market whereby securities' prices increase more in that month than in any other, according to the sources. Lotte Global Logistics is seeking a listing in March or April, according to the sources.

The corporate values of LG CNS, the IT service unit of Korea’s No. 4 conglomerate LG Group, and DN Solutions, the world’s third-largest machine tool maker, were estimated at up to some 7 trillion won ($5 billion) each.

The enterprise value of K Bank, which postponed a listing plan earlier this month, was estimated at as much as 5 trillion won, while Seoul Guarantee was valued at about 3 trillion won. Lotte Global Logistics’ corporate value was estimated at up to 1.5 trillion won.

RECOVERY SIGNS

The plans come as Korea’s IPO market shows signs of a recovery: 10 firms excluding special purpose acquisition companies (SPACs) and real estate investment trusts (REITs) are expected to debut on the benchmark Kospi market this year.

The IPO market has been slowing with the number of newly listed companies on the Kospi down to five in 2023 and four in 2022 from 15 in 2021.

“The IPO market has yet to be further depressed although K Bank postponed its IPO due to weak demand,” said a financial industry source. “More companies are eyeing listings earlier because nobody knows if market conditions will further deteriorate.”

POTENTIAL VALUATION WOES

Their listings may face valuation concerns as they plan to go public to meet IPO deadlines that they have pledged to financial investors. Their enterprise values are likely to be estimated at the levels promised to investors.

Existing shares held by financial investors take up much of the shares to be offered for their IPOs, which are expected to reduce the appetite of new investors, sources said.

Stocks owned by existing shareholders are set to make up 50% of the shares to be offered by LG CNS, DN Solutions, K Bank and Lotte Global Logistics, while Seoul Guarantee Insurance plans to only sell stocks held by existing shareholders.

Their IPOs are also expected to absorb funds available for the entire domestic IPO market, which may prevent smaller firms from listing, sources added.

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