17 new listings, 1.1 trillion won raised in H1 — down 55% and 49% from a year ago

82.4% of issuers priced at or above the top of their offering range; institutional lock-up rate surged to 46%

Sono International, Megazone Cloud among large H2 IPOs seen as market bellwethers

An illustration of an initial public offering. [Getty Images Bank]
An illustration of an initial public offering. [Getty Images Bank]

South Korea's initial public offering market shrank in the first half of this year, with the number of new listings and total funds raised falling nearly half compared with a year ago. Yet investor demand held up: 14 of the 17 companies that went public priced their shares at or above the top of their target range, and both institutional lock-up commitment rates and retail subscription competition rates climbed sharply. Analysts expect large second-half IPOs to determine whether the market can sustain a recovery.

According to IR Cuders, a total of 17 companies listed in the first half of this year — one on Kospi and 16 on Kosdaq — a 55.3 percent drop from 38 in the same period last year. Total funds raised fell 48.7 percent, from 2.21 trillion won ($1.43 billion) to 1.13 trillion won.

Companies that listed under special-listing exemptions numbered 10, down from 17 in the first half of last year, but their share of all new listings rose to 58.8 percent from 44.7 percent. Analysts note, however, that the higher proportion largely reflects the overall decline in listing volume, and it remains to be seen whether the same trend will continue in the second half.

Demand for IPO shares actually improved. Fourteen companies — 82.4 percent of all new listings — priced at or above the top of their indicative range, up 6.0 percentage points from 76.3 percent in the first half of last year.

Institutional lock-up commitment rates surged particularly sharply following reforms to the book-building system. The average lock-up rate in the first half of this year reached 46.32 percent, up 39.26 percentage points from 7.06 percent a year earlier. MakinaRocks led with a rate of 78.17 percent, followed by Kanaph Therapeutics at 76.10 percent, IMBiologics at 76.01 percent, Axbis at 75.70 percent and Meju at 75.40 percent. Analysts attributed the gains to the book-building reforms, which reduced hollow applications filed merely to secure allocations and encouraged institutional participation premised on longer holding periods.

Ten companies, or 59 percent of all new listings, recorded institutional book-building competition rates of at least 1,000-to-1. Retail demand was equally strong: 14 companies, or 82 percent of the total, posted retail subscription competition rates of 1,000-to-1 or higher, far exceeding the 42 percent recorded in the first half of last year. Polred topped the retail rankings at 3,169.9-to-1, followed by MakinaRocks at 2,807.8-to-1, Justec at 2,783.9-to-1, Axbis at 2,711.1-to-1 and Meju at 2,428.3-to-1.

First-day trading performance was also notable. Sixteen of the 17 newly listed companies, or 94.1 percent, opened above their offering price. The average opening-day gain was 178.7 percent, up 113.8 percentage points from 64.9 percent in the first half of last year. Axbis, IMBiologics, Polred and MakinaRocks all opened 300 percent above their offering prices, while Cosmo Robotics posted a gain of 291.7 percent.

Analysts caution, however, that the improved first-half indicators may not signal a structural recovery in the IPO market. The sharp drop in the number of listings may have concentrated investment capital in a handful of offerings, potentially inflating the headline figures.

Market watchers expect the listings of Sono International, Megazone Cloud, Upstage, Rebellions and Musinsa to be the key tests of whether the IPO market can recover in the second half. Regulatory changes — including new guidelines on dual listings and the planned introduction of pre-IPO book-building and cornerstone investor systems — are also expected to shape market conditions.

"The first-half IPO market saw supply contract due to seasonal slowdowns and a wait-and-see mood, but returns and competition rates remained high," said Park Jong-seon, a researcher at Eugene Investment & Securities. "In the second half, expanding supply and regulatory changes could combine to support a gradual recovery, but whether investor sentiment will actually hold needs to be watched alongside broader market conditions," he added.


hajun825@heraldcorp.com