VCs mull exit plans as market recovers from pandemic impact

South Korea’s venture capital houses are actively seeking exit plans from their startup investments as promising firms are gearing up for initial public offerings following the stock market recovery, according to market watchers Thursday.

One of the VCs that already did so was Company K Partners, which cashed out part of its investment in Wipam, the nation’s only power amplifier module manufacturer for smartphones, through a July IPO before making its market debut Friday.

The value of the Seongnam-based vendor of Samsung Electronics jumped over fivefold, as its IPO in July valued the firm at 408.55 billion won ($342 million). Its stocks were priced at 11,000 won, the upper end of the price band suggested before the IPO. K Partners first invested in the company in 2018.

K Partners is likely to sell more shares after the lockup period expires -- up to six months after its listing this week.

Wipam is one of the six VC-backed companies that issued an IPO in July.

According to disclosures, KB Investment cashed out 34.2 billion won on July 16 from the lithium-ion battery part maker Apro immediately after it started trading on Kosdaq. NHN Investment Partners offloaded part of its stock holdings in biotech firm Genolution for 2.2 billion won.

Other VC-backed companies that went public in July include Nature Holdings, an apparel maker licensed to sell National Geographic brand products; M2I Corporation, a smart factory infrastructure provider; and Saltlux, an artificial intelligence technology firm.

They accounted for 46.2 percent of the total 13 companies that issued IPOs in July on Kosdaq -- including ones for special purpose acquisition companies -- according to their prospectuses.

This is in sharp contrast with the first half of 2020, when the IPO market suffered a two-month hiatus until mid-May due to pandemic. From January to June, nine out of 24 firms -- 37.5 percent -- were VC-backed.

The rebound in July indicates the IPO scene here is back on track, quashing fears of VC firms in the nation where it takes roughly 13 years on average for a startup to go public. Before the pandemic, the ratio came to 54.6 percent in 2019 and 52.2 percent in 2018, according to the Korea Venture Capital Association.

Korea’s stock market picked up the pieces as the country managed to flatten the infection curve thanks to liquidity in the market and policies such as a temporary restriction on short selling. The Kosdaq index rose nearly 90 percent from the yearly low recorded in March when the local infection peaked.

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