Korea’s IPO market revives as newly listed stocks surge

South Korea’s initial public offering (IPO) market is reviving, with long-awaited companies such as the creator of the global hit Baby Shark preparing to go public, as newly listed shares jumped.

Seven companies that went public last month recorded an average return of 78.6% on their first trading day compared to their IPO prices, according to the Korea Exchange on Monday.

NEWEN AI, an artificial intelligence data analysis firm listed on the tech-heavy Kosdaq on July 4, closed at 38,400 won ($27.3) on the day, more than double its IPO price of 15,000 won. The stock ended at 27,100 won on Monday, higher than the trading debut price.

Daehan Shipbuilding Co., considered the most preferred stock in the IPO market in the second half, closed at 92,400 won on its first trading day of Aug. 1, up 84.8% from its IPO price of 50,000 won.

The share plunged 13.5% on Monday as investors booked profits, but it was still 59.8% higher than the IPO price.

The shipbuilder attracted more than 17 trillion won from retail investors for the IPO, which was oversubscribed 238 times.

LINED UP

Such healthy profits prompted unlisted companies valued at more than 1 trillion won to gear up for IPOs.

The Pinkfong Company Inc., the creator of the billion-view video Baby Shark, plans to file a preliminary application next month for a listing, while K Bank, a local online lender, and Essex Solutions are poised to join the move. The US magnet wire manufacturing affiliate under South Korean cable and industrial electric machinery conglomerate LS Group is seeking an IPO on the main Kospi.

Musinsa, South Korea’s fashion unicorn backed by KKR Co., is reportedly preparing to send out requests for proposals (RFPs) to securities firms soon to select underwriters, targeting a market capitalization of 10 trillion won. The company had been expected to go public in 2027.

“Companies that previously postponed or withdrew their listings are now rushing to go public as stock markets rallied and the IPO market heated up.”

OVERHANG RISK

Investors are expected to shun the IPOs of companies with overhang risk, in which existing shareholders dump their stocks after the lock-up period ends, market sources said.

"We need to be cautious of stocks from companies with a large number of floating shares after listings, as they may plummet," said an IPO market expert.

Companies with aims to repay debts with IPO proceedings and focus on selling existing shares are unlikely to attract investors, the market sources added.

K Bank again canceled its IPO plan in January as demand in bookbuilding was tepid due to the large volume of shares set to be unloaded by its existing shareholders.

Write to Bum-Jin Chun and Seok-Cheol Choi at forward@hankyung.com
 
Jongwoo Cheon edited this article.