Coronavirus wipes off IPO plans in March

The coronavirus pandemic and ensuing market volatility are disrupting listing plans of South Korean firms that could otherwise have raised at least 289.5 billion won ($227.8 million), filings showed Monday.

Seven companies have withdrawn or put off their initial public offerings in March.

They include stem cell therapy developer SCM Life Science, telemarketing service provider Metanet Mplatform, electric vehicle parts maker LS EV Korea, diabetes treatment developer NovMetaPharma and construction material maker Sencoretech.

Cosmetics goods material maker NFC suffered underbooking in a retail tranche last week, forcing it to effectively withdraw the listing plan for the second time this year.

Drug developer Aptamer Sciences also postponed the institutional tranche last week to March 30, exploring chances for an IPO in April.

The about-face of investors did not necessarily reflect the earnings of companies. Except for biotech firms SCM Life Science, NovMetaPharma and Aptamer Sciences, the remaining four firms were profitable in 2018.

In light of the lackluster investor sentiment, there will likely be only two IPOs worth a combined 40.8 billion won this month.

Two firms -- online marketing firm Playd and smartphone parts maker NPD -- proceeded to the retail tranche after ending the institutional portion in February.

Excluding special purpose acquisition companies, Playd and NPD are expected to be the last firms to wrap up IPOs in March.

The latest market unease, however, triggered a sharp slide in stock value of investors. The stock price of both Playd and NPD shrank by nearly half of the offered price as of Friday.

SCM Life Science, Metanet Mplatform, LS EV Korea and NovMetaPharma said they have withdrawn their preliminary prospectus to avoid “an environment where companies are not properly valued.”

The weak IPO market is also dashing shareholders’ hope to explore chances to exit from privately held firms: including Duopharma Biotech Berhad, holding 5.53 percent of SCM Life Science; BRV Capital Management, with 23.65 percent in Sencoretech; and Anchor Equity Partners, the second-largest shareholder of Metanet Mplatform.

Since the coronavirus outbreak in Korea in January, companies and shareholders are facing rough times. Firms in January raised 21 billion won through IPOs, while the February offerings fetched 59 billion won. Both were lower than half of the average figure in the past three years, according to Eugene Investment & Securities.

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