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IPO market forecast to lose steam

July 17,2017
Korea’s initial public offering (IPO) market is expected to lose ground sharply in the second half of the year as several large candidates have scrapped or postponed their plans, sources said Sunday.

The country’s IPO market was white-hot in the first six months of the year thanks to share sales by Korea’s largest mobile games maker Netmarble Games and three other companies that were listed on the main stock market.

The four companies raised 3.9 trillion won ($3.44 billion) by selling their shares for the first time, far more than the 428.6 billion won of a year earlier and slightly lower than the 4.3 trillion won for all of 2016.

Analysts, however, predicted that the market will not keep up the pace in the latter half of the year, usually peak IPO season, due to cancellations or postponement of plans by some big private and state-invested enterprises.

Car electric equipment maker LS Automotive, a unit of LS Group, withdrew its IPO plan early this month, opting to sell shares to a global private investment fund.

In April, E-Land Retail, a subsidiary of South Korean fashion and retail conglomerate E-Land Group, backed down from its plan to take the company public due to the group reorganization and decided to push again for an IPO next year.

Private companies are not alone. State electricity companies - Korea South-East Power and Korea East-West Power - have yet to determine their IPO plans following the inauguration of the Moon Jae-in government in May.

In addition, it remains unclear whether Lotte Group will again push for an IPO of its hotel unit, which was canceled in July last year due to the group’s alleged involvement in a nation-rocking corruption scandal that ensnared ousted former President Park Geun-hye and her longtime ally Choi Soon-sil.

In light of such cancellations or postponements, market watchers said, the local IPO market is unlikely to achieve its target for this year.

The Korea Exchange (KRX), the country’s bourse operator, had projected some 20 companies to sell their shares for the first time to be listed on the main stock market, with the IPO amount likely to reach 7 trillion won.

“With the current trend, the annual target appears out of reach,” a KRX official said. YONHAP