Firms benefit from Lotte's IPO withdrawal

[THE INVESTOR] Hotel Lotte’s decision to scrap what would have been the nation’s largest-ever initial public offering is benefiting companies that are preparing to list on the local stock exchange in June.

As Hotel Lotte’s IPO faces a major setback, firms expect to share the spotlight that had been focused on the Korean retail giant Lotte Group’s hotel unit. 

Some companies, which are set to go public on the benchmark KOSPI or secondary KOSDAQ market, are already benefiting as investors who planned to subscribe to Hotel Lotte’s shares see them as alternatives.

A presale demand survey for ST Pharm, a subsidiary of Dong-A Socio Holdings, show that due to intense competition from institutional investors, its shares could be oversubscribed to the tune of 717 times.

“The companies’ market value was attractive enough to draw the attention of institutions investors, but they also benefitted from Hotel Lotte’s IPO withdrawal,” one source said.

Competition for shares of Chinese auto parts manufacturer Rothwell International, which is set to be listed on tech-heavy KOSDAQ, was estimated at several hundreds to one.

On June 10, Korean prosecutors raided the offices of Lotte Group and several affiliates, dealing a blow to the hotel unit’s IPO.

Lotte Group chairman Shin Dong-bin said that he would pursue the IPO within this year but industry experts consider it unlikely,

By Park Han-na (hnpark@heraldcorp.com)