As recovering from the financial crisis, the next step is IPOs
With the Seoul stock market booming, many large public corporations are planning to go public. Companies forced to cancel plans to go public last year because of the market downturn, are now beginning to venture out.
Tong Yang Life Insurance, Jinro, and Grand Korea Leisure (Seven Luck Casino) are among the companies planning to go public. Hyundai Food System, of which Hyundai Department is a major stakeholder with around 50%, is scheduled to be listed on the stock market this year. Korea District Heating Corporation plans to offer shares at 39,900 - 45,000 each while Korea Power Engineering Company is also scheduled to go public.
Posco Engineering & Construction Co., a unit of Korea’s largest steelmaker, plans to raise as much as 988.6 billion won (US$802 million) in an initial share sale, the first by a building company in more than seven years. Posco Engineering, Korea’s sixth largest construction company, posted a net income of 227.5 billion won in the first half, almost triple that of a year earlier, according to its half-year financial statement.
Korea’s stock markets have long been considered the world’s ugly duckling. But things are changing. A growing number of non-Korean companies are rushing to list their shares on Seoul’s stock markets to take advantage of the cheaper costs of going public and remaining listed, plus overflowing liquidity in the stock markets here.
Floating new shares on Seoul stock markets costs far less than doing it in places like New York, London and even Hong Kong and Singapore. According to experts, a company hoping to list its shares on the U.S. stock markets usually spends the equivalent of at least 10 percent of its total IPO amount. However, for Seoul stock markets it’s about 5 to 6 percent, cheaper than most advanced stock bourses.
M-Biz Global, a British mobile phone solution provider, has selected Daewoo Securities to arrange its upcoming stock listing in Seoul. If the plan materializes as planned in the second half of this year, M-Biz Global is expected to become the first British company to make an appearance on the Seoul stock markets. Meanwhile, Chinese companies such as China Engine and China Haoran are trying to list on the Seoul stock market.
Many companies that joined the bourse since last December have enjoyed rapid gains in their share prices. For instance, China Food Packaging saw its share price surge 250 percent since its market debut on March 27, rising from an initial price of 2,260 won to 7,720 won.
STX Group is considering offering shares in STX Europe ASA, formerly known as Aker Yards ASA, to the public, by listing the Norway-based shipbuilder in another country such as the United Kingdom, Singapore or Korea, said STX Group Vice Chairman Lee Jong-chul.
Nine out of the 38 companies that went public last year managed to achieve sales in line with predictions given to investors at the time of their initial stock offering. A total of 44 companies went public on the Seoul markets last year. Three firms whose fiscal years did not end in December and three other companies that did not give earnings expectations at their IPOs were excluded from the survey.