Socar bombs in IPO with shares falling below IPO price

Socar vehicles are parked in a parking lot in central Seoul on Monday. [NEWS1]

Socar finished its first day of trading lower than its subscription price and fell short of a 1-trillion-won ($743-million) market capitalization.

Sold in an initial public offering (IPO) for 28,000 won, Socar shares fell 6.07 percent to 26,300 won on Monday after debuting on the Korea Exchange that morning.

That would give Socar a market capitalization of 860 billion won. It is now No. 239 on the Korea Exchange. It is the only car-sharing company to be listed in Korea.

Roughly 4.5 million of Socar shares were traded on Monday, with institutions net offloading 16.4 billion won of the shares and foreign investors dumping 4.6 billion won. Retail investors purchased 25.6 billion won of Socar.

Socar shares opened at 28,000 won. Trading was choppy, with shares rising 4.1 percent in less than 30 minutes after the market opened.

But it started to decline then and fell as low as 25,550 won around 10 minutes before the market close, down 9 percent from the subscription price.

Socar went through its two-day public subscription period earlier in the month. It lowered the subscription price and reduced the number of offering shares by 20 percent amid the growing concerns over the overvaluation.

Socar's pared-back listing comes as other companies choose to forgo the IPO process altogether in the face of rising interest rates and investor skepticism.

Some market analysts say the shares will potentially increase as the company’s earning performance is likely to improve in the near future.

“Socar is the only car-sharing company that is highly likely to turn to black this year,” said an SK analyst Han Seung-han.

The company reported 289 billion won in revenue and a 21 billion won operating loss in 2021.

Established in 2011, Socar first started its car-sharing service in Jeju with only 100 vehicles and 30 users. It operates about 18,000 cars and has about 7 million users.

It now dominates the market with an 80 percent share, the company said.

BY SARAH CHEA [chea.sarah@joongang.co.kr]