February set to be blockbuster month for IPOs

February is set to be another busy month for the South Korean stock market as a large number of companies are seeking to launch initial public offerings on retail investors’ strong appetite for direct investments, according to investment banking sources.

This month alone, 12 firms are scheduled to float their shares on the stock market or hold retail subscriptions.

The IPO subscriptions of five newcomers such as semiconductor equipment manufacturer Auros Technology and medical artificial intelligence firm Vuno are set to take place.

Both market experts and retail investors are keeping a close eye on this month’s upcoming IPOs because companies such as electronic components maker SoluM and Singapore-based Prestige Biopharma went through successful subscription processes by fixing their offering prices at top-ends or even above the offering price ranges.

Eugene Investment & Securities analyst Park Jong-sun forecast that February is likely to have the most number of new listings, compared to the same month in the past 18 years.

The combined IPO proceeds and the companies’ market value are also to be the biggest among the month’s records in the past 15 years, reaching some 700 billion won ($628.73 million) and 3.8 trillion won, respectively, the market watcher further predicted.

Fueled by private investors’ keen interest in bidding for new stocks amid a recent market rally, the domestic IPO market in January this year already broke multiple records that were last set a decade ago.

Seven firms made their market debuts last month, whereas the average number of new listings was only two per month over the past six years. The total proceeds raised through public offerings and their market capitalization also reached record highs of 142.1 billion won and 803.4 billion won.

Beginning this year with robust IPOs was largely attributable to ample market liquidity. The amount of investor deposits at brokerage houses more than doubled to about 70 trillion won this year from some 30 trillion won a year ago. Deposits at cash management accounts also soared over 20 percent on-year to 55 trillion won, another local analyst explained.

“Recently, retail investors who seek medium-risk, medium-return tended to choose the IPO market as their alternative investment vehicle. As many of them were attracted to public offerings, the market’s competition among the investors (for IPO subscriptions) became fierce,” said Na Seung-doo, an analyst at SK Securities, while stressing the need to separate the wheat from the chaff.

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