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IPOs

Seoul stock markets brimming with startup IPOs in Jan

By Dec 23, 2020 (Gmt+09:00)

Retail investors at a Seoul brokerage firm branch subscribe for Kakao Games' IPO shares
Retail investors at a Seoul brokerage firm branch subscribe for Kakao Games' IPO shares

Singapore-based biosimilar maker Prestige BioPharma and nine startups are set to make initial public offerings in Seoul to raise at least 640 billion won ($577 million) in aggregate next month, tipped to be the busiest January in the history of South Korea’s IPO market.

January is usually a slow month for initial public offerings. But hefty retail money inflows and record-setting stock market rallies have prompted the startups to tap the IPO market.

They also appear to be scheduling their IPOs before high-profile offerings estimated in the billions of dollars – including SK Bioscience, SK IE Technology and SD Bio Sensor – hit the market later next year.

“With a string of IPOs lining up from the start of next year, the IPO market will likely remain buoyant throughout the year from January, driving prices sharply higher,” said a brokerage company analyst.

Additionally, from next year, the amount of IPO shares allocated to high-yield funds will be cut to 5% from the current 10%. The remaining 5% must be allocated to retail investors, which means reduced volume for institutional investors and increased uncertainty in the book-building process, analysts said.  

But additional retail money inflows likely mean more room for gains in the IPO market, they added.

South Korea's broader stock market index Kospi posted its highest close of 2,778 on Monday, when the Kosdaq climbed to its strongest finish in 20 years.
Graphic by Jerry Lee
Graphic by Jerry Lee

The estimated IPO size of 640 billion won next month is expected to be the highest amount for any January. Back in January 2017, three Korean companies went public to raise a combined 96 billion won from their IPOs, which meant the biggest IPO volume yet seen in a January.
In January of this year, only one company – WISE iTech Co., a software developer – raised 10.2 billion won in an offering on the junior Kosdaq market.

FROM BIOSIMILAR MAKER TO SAMSUNG UNIT

Prestige BioPharma, headed by Korean Lisa Soyeon Park, is tipped to be the biggest IPO next month. The biosimilar maker is seeking to raise between 380 billion and 490 billion won on the Seoul bourse.

The company is developing biosimilars for breast cancer and colon cancer treatments. If its shares are priced at the higher end of its indicative price range, its market value will come to 1.9 trillion won. That compares with the 49 trillion won of South Korea’s top biosimilar maker Celltrion Inc., the sixth-largest stock on the Kospi market in terms of market capitalization.

Solum, spun off from Samsung Electro-Mechanics Co., is planning to raise 87.7 billion won through the public offering. Samsung Electro-Mechanics is its second-largest shareholder with an 11.6% stake and its key customer.

Other Korean IPOs, scheduled for later next year, include SK IE Technology, a manufacturer of polyimide films used in lithium-ion batteries and smartphone displays. It was hived off from SK Innovation Co. last year and submitted an IPO application last week.

Game developer Krafton Inc. and two units of the country’s top mobile messaging app Kakao Corp. – KakaoBank and Kakao Pay – are also set to make trading debuts in Korea next year.

This year’s high-profile IPOs in Korea included SK Biopharmaceutical Co. and Big Hit Entertainment Co, the label behind seven-member BTS, as well as Kakao Games Corp.

Write to Ye-jin Jeon at ace@hankyung.com

Yeonhee Kim edited this article.

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