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IPOs

World’s top COVID-19 test kit maker draws $28 bn in IPO subscriptions

SD Biosensor was Korea’s highest-grossing biopharma firm in Q1, earning seven times more than Samsung Biologics

By Jul 09, 2021 (Gmt+09:00)

SD Biosensor’s antigen-based home test kit takes fewer than 30 minutes to determine if a person is virus-infected.
SD Biosensor’s antigen-based home test kit takes fewer than 30 minutes to determine if a person is virus-infected.

The IPO of SD Biosensor Inc., which has sold the most COVID-19 test kits in the world -- selling more than 700 million kits from February 2020 to May 2021 -- was oversubscribed by more than 274 times, drawing 31.9 trillion won ($27.8 billion) from retail investors. 

According to the financial industry, over the July 8-9 two-day subscription period, SD Biosensor brought in the fifth-largest amount of funds ever in Korea, surpassing SK Biopharmaceuticals Co.’s record of 31 trillion won ($27 billion) in July 2020. SD Biosensor will list on the Kospi on July 16.

In pandemic-hit 2020 the company enjoyed a growth rate almost unprecedented in Korean business history, posting a striking 492-fold increase in operating profit to 738.3 billion won ($643 million) versus 2019 figures.

Moreover, in the first quarter of 2021, SD Biosensor was Korea’s highest-grossing biopharmaceutical firm, earning 576.3 billion won ($502 million) in operating profit, a figure seven times higher than that of market leader Samsung Biologics.

The company’s shares were far more oversubscribed than initial market expectations, analysts highlighted. As the global pandemic seemed to have abated during the earlier months of 2021, experts including the country’s financial regulator, the Financial Supervisory Service (FSS) had questioned the skyrocketing valuation of the test kit maker.

Eventually, SD Biosensor lowered its IPO share price by around 40% following FSS’s request to adjust it. Its IPO price per share is 52,000 won ($45.32).

The analysts added, however, that with the world now facing multiple variants of COVID-19, SD Biosensor’s strong earnings results are likely to continue for a longer period than the original forecasts.

According to American media reports yesterday, the Delta variant has become the dominant strain in the United States, whereas Japan declared a state of emergency for the fourth time in Tokyo. South Korea has also been hit by a fourth wave of the COVID-19 pandemic, with the government announcing plans to implement maximum social distancing measures from July 12.

Sources also reported that SD Biosensor’s IPO shares were oversubscribed by 1,144 times among the institutional investors who participated in the subscription period between July 5-6.

“Not only did SD Biosensor lower its IPO price from the initial level, but the market environment has become more positive with certain COVID variants spreading rapidly. In short, many investors will now be thinking that the stock price is cheap,” said an industry official.

The financial analysts in Korea added that SD Biosensor’s successful public offering will likely drive another IPO market boom in the second half of this year.  

A number of major IPOs are planned for the second half, including Kakao Bank, HK inno.N Corp., Krafton Inc., Kakao Pay, Hyundai Heavy Industries Co., Lotte Rental Co. as well as LG’s battery unit LG Energy Solution Ltd.

The analysts said that the total value of these IPO-eying companies’ shares, to be open for subscription in the second half, will surpass 20 trillion won ($17.4 billion).  

Write to Jin-seong Kim at jskim1028@hankyung.com

Daniel Cho edited this article.

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