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IPOs

Korea’s Netmarble Neo drops listing plan as sentiment sours

Investor sentiment on IPOs, bond sales chill as global monetary policy tightens

By Nov 05, 2021 (Gmt+09:00)

Netmarble Neo's popular mobile game Lineage 2: Revolution
Netmarble Neo's popular mobile game Lineage 2: Revolution

South Korea’s game developer Netmarble Neo decided to withdraw its initial public offering plan as sentiment in the primary market sours amid global central bank moves to tighten monetary policies.

The mobile unit of the country’s gaming giant Netmarble Corp. on Nov. 4 said it has dropped its plan to list on the main Kospi market. The decision came as it was unlikely to raise as much money as targeted, given the subdued demand for IPOs. Its corporate value had been estimated at around up to 2 trillion won ($1.7 billion), according to investment banking industry sources.

In the last month, six companies abandoned their plans to go public. Shipping company SM Line Corp. and handbag maker Simone Acc. Collection Ltd. dropped their IPO plans due to sluggish demand from institutional investors, while other companies including Cell Bio Human Tech and LiComm followed suit.

Sluggish local stock markets in the fourth quarter put pressure on the IPO market, which had been booming for more than a year, analysts said. Since September, a series of companies such as K Car Co., FromBIO Inc. and iFamiySC Co. have cut their IPO prices due to weak demand. Some share prices have remained subdued.

Sentiment in the domestic corporate bond markets has also chilled. Pulmuone Foods Co., DTR Automotive and DoubleUGames failed to raise as much money as planned from institutional investors. They have been reluctant to make investments due to the recent jump in interest rates.

Corporate bond issuers grew more cautious since borrowing costs have yet to show signs of stabilization. Local companies have issued or plan to issue a combined 1.1 trillion won worth of bonds in November, about half the 2.2 trillion won of a year earlier.

“A heyday that has lasted more than a year is coming to an end,” said an IB source. “Many companies are expected to agonize over funding plans for the next year.”

Write to Jin-Seong Kim at jskim@hankyung.com

Jongwoo Cheon edited this article.

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