More hot IPOs on deck as fundraising returns to pre-pandemic level

More initial public offerings of South Korean companies are on deck, as the IPO landscape here is increasingly becoming a heated battleground for investors searching for an immediate return after their listing on the stock market.

Korea’s IPO market appears to have returned to the pre-pandemic level, as liquidity-driven investors are rushing to opportunities and regulators are shaping out rules to give IPO stock investors a fairer chance of allocation.

In the first quarter, 14 companies -- excluding eight special purpose acquisition companies -- have snapped up a combined 2.6 trillion won ($2.3 billion), the filings showed. This is nearly 10 times higher than 274 billion won in proceeds a year prior, when the COVID-19 outbreak began to affect the market.

This indicates that the Korean IPO market has swiftly returned to pre-pandemic level, given that the proceeds of the first quarter of 2019 stood at 2.8 trillion won.

Giant IPOs are supporting the trend. Besides a 1.5 trillion-won fundraising for pharmaceutical contract manufacturer SK Bioscience, which took up nearly 60 percent of the total IPO proceeds in the first quarter, the Korean investors are anticipating what could fetch up to 2.2 trillion won through battery materials firm SK IE Technology’s plan to go public in the second quarter.

The lithium-ion battery separator split-off of SK Innovation later in April will offer 21.4 million common shares, or a third of the company’s stake, a prospectus showed. Its shares are poised to start trading on the Korea Exchange’s main board Kospi on May 11 once the IPO completes as planned.

The company, carved out of SK Innovation in April 2019, has logged a revenue of 469.3 billion won and the operating profit of 125.2 billion won in 2020.

 Another blockbuster IPO deal has materialized. On Thursday, Krafton, developer and publisher of shooter game PlayerUnknown’s Battlegrounds, has initiated a preliminary examination of an IPO for a Kospi listing, as the company’s valuation surpassed the 20 trillion-won mark on the domestic over-the-counter markets.

Krafton’s operating profit came to 896.6 billion won in 2020, up 23 percent from the previous year.

The IPO waiting list also includes LG Chem’s battery split-off LG Energy Solution, test kit maker SD Biosensor, as well as internet giant Kakao’s subsidiaries including internet-only lender Kakao Bank, financial technology firm Kakao Pay and Kakao Entertainment, which was formerly known as Kakao M. Among them, SD Biosensor is awaiting preliminary approval for its IPO from the KRX, while the rest have yet to apply for KRX preliminary examination.

By Son Ji-hyoung (consnow@heraldcorp.com)