Capital raised through IPO lowest in 5 years

The annual volume of capital raised through initial public offerings in the South Korean stock market this year is expected to mark the lowest in five years, amid volatile sessions throughout 2018 due to external uncertainties, data showed Sunday.

Some 2.8 trillion won ($2.4 billion) in equity capital is expected to be raised through IPOs in Korea’s markets by the end of the year, according to data from the Korea Exchange, the sole market operator. The figure included the anticipated raise of capital next week from five companies, including budget carrier Air Busan.

The figure equals some 34.5 percent of the corresponding figure in 2017, while marking the lowest since 2014.

By markets, investment through IPOs on the top-tier Kospi sank 84 percent in 2018 compared to the previous year, while that of the second-tier Kosdaq fell 42.2 percent.

The estimate includes the volume of investment raised through listings of special purpose acquisition companies, while excluding those through companies that are relisted or transferred from other markets, as well as real estate investment trusts.

KRX data also indicated that the number of companies that raised equity capital worth over 100 billion won halved this year to five compared to a year prior.

Of the five IPO deals, the listing of Aekyung Industrial, a household goods maker, was the biggest this year, raising 119.8 billion won in equity capital in March.

This comes in sharp contrast to the 2017 IPO market that teemed with grand deals. Game software maker Netmarble Games raised 2.7 trillion won through an IPO. Insurance firm Orange Life Insurance -- then known as ING Life Insurance -- and drug distributor Celltrion Healthcare raised 1.1 trillion won and 1 trillion won in equity capital respectively through IPOs.

This could partly be attributed to the ongoing global trade war threat, which put a damper on stock rallies seen in 2017.

The bear market triggered a series of withdrawals of what were touted as mega IPO deals by Korean privately held firms on fears of stock undersubscription. The anticipated 5 trillion-won IPO deal of lubricant oil maker SK Lubricants ground to a halt in April. Kakao Games and CJ CGV Vietnam Holdings also announced the delay of plans to go public in September and November, respectively.

Meanwhile, refiner Hyundai Oilbank has yet to embark on its projected 2 trillion-won IPO deal due to an ongoing financial audit by the Financial Supervisory Service. The financial watchdog is looking into the validity of share ownership in a joint venture company called Hyundai and Shell Base Oil.

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