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Total Amount of S. Korea’s IPO in 2018 to Surpass 8 Trillion Won
Reaching Record High
Total Amount of S. Korea’s IPO in 2018 to Surpass 8 Trillion Won
  • By Yoon Yung Sil
  • January 11, 2018, 03:00
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The total amount of IPO is expected to exceed 8 trillion won (US$7.48 billion) this year.
The total amount of IPO is expected to exceed 8 trillion won (US$7.48 billion) this year.

 

The total amount of initial public offering (IPO) is expected to be around 8 trillion won (US$7.48 billion) this year, reaching a record high. The number of companies demanding IPO is also forecast to reach eight in January, the highest in the last five years.

According to Eugene Investment & Securities Co. on January 10, the total amount of IPO is expected to exceed 8 trillion won (US$7.48 billion) this year. In its report, Eugene Investment & Securities said, “The number of IPO will be at the similar level as last year but the amount of IPO will be an all-time high.” The size of IPO stood at 7.8 trillion won (US$7.29 billion) in 2017 and 6.4 trillion won (US$5.98 billion) in 2016.

The amount of IPO is forecast to reach an all-time high because blue-chip companies are to go public at the same time this year. Hyundai Oilbank Co. and SK Lubricants Co. have announced to their plans to list on the stock market this year. According to investment banking industry sources, the size of Hyundai Oilbank and SK Lubricants IPO will be around 2 trillion won (US$1.87 billion) and 1 trillion won (US$934.58 million) respectively. Aekyung Co., which has postponed its listing so far, is also planning to go public this year and its amount of IPO will be around 1 trillion won (US$1.87 billion). The combined amount of the three companies is expected to reach 4 trillion won (US$3.74 billion).

In particular, the figure can surpass 10 trillion won (US$9.35 billion) when Hotel Lotte Co., which is highly likely to be listed next year, advances its listing by this year. The amount of Hotel Lotte IPO is forecast to be around 6 trillion won (US$5.61 billion) based on the figure in the past when the company pushed ahead with the IPO. The total amount of IPO can exceed 10 trillion won (US$9.35 billion) when Hotel Lotte goes public this year.

The size of IPO on the nation’s second-tier KOSDAQ market, which is expected to benefit from the government’s promotion policy, is also forecast to record the highest since 2010. Starting with information technology solutions provider Cafe24 Corp., the first company to be listed through the operator's “Tesla Policy” early this year, an increasing number of companies will be listed on the KOSDAQ under the so-called “Tesla standards.” Notably, the number of Tesla listed companies will be expected to be higher than expected this year as the Financial Services Commission decided to lift various restrictions, including redemption claim of leading IPO managers, on the 9th.

In fact, there are eight book building companies this month, far exceeding the average over the last five years. There were only three and two book building companies in January 2016 and 2017. Currently, companies, such as Cafe24, Barrel, Enzychem Lifesciences Corp., Arlico Pharm Co., are to forecast demands by the end of January. Park Jong-sun, an analyst at Eugene Investment & Securities, said, “The government announced to provide tax benefits, expand a portion of pension funds investment and ease the requirement of Tesla standards in order to revitalize the KOSDAQ market in its economic policy for 2018. Therefore, there are higher expectations for the KOSDAQ market than any other time in history.”