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Big guns to revive Korea’s lackluster IPO market

No. of firms applying for listing quadruples in March-May

BTS (Big Hit Entertainment)
BTS (Big Hit Entertainment)

South Korea’s lackluster initial public offering market is regaining momentum as a number of big players are set to go public this year, according to investment banking sources Sunday.

Fifteen firms have submitted preliminary applications for IPOs to the Korea Exchange in May, up 36.3 percent from a year earlier, nearly four times higher than in March -- when the local stock indexes plunged amid the escalating coronavirus pandemic.

The recent surge in aspiring IPOs was seen as reflecting a significant recovery of the stock market.

Kospi plummeted 11.7 percent in March, but rebounded 11 percent last month and another 4.2 percent this month to exceed the psychologically important 2,000-point mark. The tech-heavy Kosdaq also jumped 10.6 percent this month.

Adding to the general market recovery, news of big-name players on potential IPO track further boosted the stalled market trend here.

Big Hit Entertainment, the management agency of K-pop mega group BTS, and Prestige BioPharma, a Singapore-based biopharmaceutical company, filed for preliminary review for listing on the nation’s main bourse Kospi on Thursday, according to the Korea Exchange.

The nation’s stock market operator is expected to complete the review process in 45 days. IPO applicants have to file for the offering in six months upon passing the review process. In theory, Big Hit and Prestige will be able to go public this year.

Their detailed IPO plans have not been decided, but market observers estimated Big Hit and Prestige’s market values to reach up to 5.2 trillion won ($4.2 billion) and 600 billion won, respectively, considering their price-earnings ratio.

(Yonhap)
(Yonhap)

Earlier, market experts forecast that SK Biopharmaceuticals would revitalize the nation’s sluggish IPO market. It is widely projected to be the biggest IPO since the nation’s top mobile gaming firm Netmarble’s share listing in 2017.

On May 19, the new drug development unit of the country’s third-largest conglomerate SK Group submitted a registration statement to the country’s financial authorities in the run-up to its IPO scheduled for the following month.

Shares are expected to start off at an estimated price range between 36,000 won and 49,000 won, with expectations of reaching around 960 billion won by issuing 19.58 million shares to investors. The firm’s estimated market value is expected to reach up to 3.8 trillion won.

“SK Biopharmaceuticals, which is expected to make a soft landing in the Kospi market, is expected to pave the way for other potential IPOs along the way,” said a local investment banking official who wished to be anonymous.

Another industry official said the anticipating large-cap stocks would boost investor sentiments, but he also pointed out that if too many IPOs are held at about the same time, there would be a growing divide between winners and losers.

By Jie Ye-eun (yeeun@heraldcorp.com)
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