IPO market loses its mojo as investors lose interest
With the Kospi range bound between the 2,900 and 3,000 and far from its 3,316 peak in 2021, companies are starting to reconsider plans to go public.
Netmarble Neo, 78.57-percent owned by Netmarble, announced on Nov. 4 it is withdrawing its plan to list as a Kospi stock. A day earlier, SM Line, a shipping company, announced it is delaying its Kosdaq listing.
Handbag maker Simone Accessory Collection withdrew its plans to list as a Kospi stock last month.
The companies were all expected to hit the market with market capitalizations over 1 trillion won ($849 billion).
The withdrawals come as they are pricing weak due to poor investor sentiment.
"With a struggling initial public offering [IPO] market and stagnant movement of shipping company shares in our peer group, we considered the valuation of SM Line shares in the IPO market below our expectations," SM Line said in a statement last week. "We discussed with our underwriter NH Investment & Securities to indefinitely delay our IPO schedule."
Institutional investors say they were bidding below the low end of the 18,000-to-25,000-won range during the two-day bookbuilding at the beginning of this month.
Stocks listing earlier this year were hitting the tops of their ranges.
Data show institutional investors overall are becoming less passionate about IPOs. Among nine stocks that newly listed last month, excluding special purpose acquisition companies, average competition in the bookbuilding process was 972 to 1, according to data from Eugene Investment. It is the first time this year the average competition rate fell below 1000 to 1.
"With weak stock indices and falling returns of IPO stocks, institutional investors are turning away," a source from a brokerage's IPO team told the JoongAng Ilbo.
Investor sentiment is expected to worsen later this year given inflation and tighter monetary policy.
LG Energy Solution, Hyundai Engineering, Hyundai Oilbank, SSG.com, and Market Kurly are preparing to list. They are likely go public next year.
BY KIM JEE-HEE, HWANG EUI-YOUNG [firstname.lastname@example.org]