Rather Than NASDAQ
Samsung Biologics Co Ltd, a major subsidiary in the biotechnology and pharmaceutical sector which is fostered as a new growth engine by Samsung Group, plans an initial public offering (IPO) this year. As the blue chip company with a 10 trillion won (US$8.78 billion) market value, decided to go public, another biotechnology investment craze, which covered the stock market last year, is expected.
Samsung BioLogics announced that it held a board meeting at the headquarters in Songdo, Incheon, on Apr. 28 and decided to list the company on the Korea Composite Stock Price Index (KOSPI), the nation's main stock exchange market, by the end of the year. The company will distribute a request for proposal (RFP) to major securities firms at home and abroad shortly in order to designate managers for the IPO, and complete the selection by the end of next month. The company will apply for screening in preparation for the IPO to the Korea Exchange (KRX) in the middle of Aug. after settling this year’s semi-annual report and list its shares between Oct. and Nov.
Samsung BioLogics seriously had considered the IPO on the NASDAQ of the U.S. earlier, but decided to go public on the KOSPI or KOSDAQ at the end of last year considering the symbolism as the group’s next-generation major affiliate. It finally chose the KOSPI. This was because the company believed that it would be able to stably raise funds for the continuous plant expansion through the capital increase by listing on the KOSPI, which has a relatively better demand-supply condition than the KOSDAQ,
It is urgent for Samsung BioLogics to make additional investments as much as other global leading biotechnology firms do. In fact, its competitor Boehringer Ingelheim recently announced its plan to expand its biomedicine contract manufacturing organization (CMO) plant with an annual capacity of 150,000 liters, sparking the expansion competition between CMO businesses. Samsung BioLogics also started the construction of the third plant with an annual capacity of 180,000 liters last Dec. and complete the expansion of the fourth plant by 2020. An official from the investment banking industry said, “By the feature of CMO business that the size means the competitiveness, Samsung BioLogics needs to continuously raise funds even after the IPO. On the KOSDAQ market, which has the weak base of institutional investors and the high rate of individual investors, it is difficult to carry out the large-scale paid-in capital increase worth hundreds of billions of won.”
Samsung BioLogics plans to use the funds raised by the IPO in the construction of the third plant with an annual capacity of 180,000 liters and the support for Samsung Bioepis. Currently, analysts estimates the company's potential market value at 10 trillion won (US$8.78 billion) or more, and the offering size at around 2 to 3 trillion won (US$1.76 to 2.64 billion) under the assumption that it offers shares by 20 to 30 percent.
Securities market experts think that Samsung BioLogics’ decision will trigger the biotechnology and pharmaceutical stock craze in the Korean stock market which began last year. In particular, the total biotechnology market is expected to grow as mid-size and large biotechnology companies, such as Celltrion Healthcare, CJ HealthCare and SK Biopharmaceuticals, will go public this year.