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IPOs

SK Bioscience IPO draws record-high demand from retail investors

By Mar 11, 2021 (Gmt+09:00)


Retail investors participate in SK Bioscience's public subscription at a Korea Investment Securities branch. 
Retail investors participate in SK Bioscience's public subscription at a Korea Investment Securities branch. 


South Korean vaccine maker SK Bioscience Co. has set a new record for initial public offering demand, raising around 63.6 trillion won ($56 billion) in deposits during its two-day public subscription on Mar. 9 and 10.

This beats the previous records of Kakao Games Corp. and Big Hit Entertainment Co., which pulled in 58.5 trillion won and 58.4 trillion won, respectively, in subscriptions last year.

SK Bioscience shares were oversubscribed by 335 times, attracting around 2.4 million subscription accounts. Some small retail investors may not be able to secure any IPO shares due to the overwhelming demand, according to financial industry sources on Mar. 10.

Following its successful bookbuilding and public subscription, investors are now paying close attention to how the share price will move once SK Bioscience goes public on Mar. 18. 

If SK Bioscience debuts on the market with its opening price double the offering price of 65,000 won and reaches the 30% daily upper limit, then it could touch 169,000 won.

The company's employees and executives subscribed to around 4.5 million shares as part of the employee stock ownership scheme — thus, on averge, each person holds around 500 million won worth of shares. In this case, investors would see gains of 104,000 won apiece.

If the company's share taps the ceiling for two consecutive days, then the price will hit 219,700 won and the company’s executives and employees could, on average, pocket up to 1.3 billion won.

This is a plausible scenario given that SK Bioscience's shares currently trade around 200,000 won apiece in the over-the-counter market. 

The company's Chief Executive Ahn Jae-yong and Chief Technical Officer Kim Hun are expected to take profit worth billions of won via stock options. They each received stock options for 109,260 shares with the exercise price set at 9,154 won, meaning they could each fetch around 6.1 billion won based on the offering price.

Yet, amid the hype, some uncertainties remain, given that bio shares have been performing weakly as of late alongside a correction in the market. 

SK Bioscience aims to raise 1.49 trillion won ($1.3 billion) via the initial public offering. The company's enterprise value is expected to reach 5 trillion won upon its trading debut.

The Korean vaccine maker plans to use the proceeds to expand its research and production facilities; beef up its pipeline; foster partnerships; and enhance its vaccine portfolio. The company is also keen on improving shareholder value while securing resources to aid its growth as an innovative vaccine maker.

Write to Ye-jin Jun and Geun-ho Im at ace@hankyung.com

Danbee Lee edited this article.

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