Korea Exchange IPO
The initial public offering (IPO) of the Korea Exchange (KRX), which was de-listed as a public institution last month, is drawing a lot of attention in the stock market.
When the KRX makes the IPO, the securities firms, which hold a 2 to 5 percent stake in the KRX, are expected to make a considerable amount of profit.
The stock industry estimates that the market capitalization of the KRX reaches nearly 3 trillion won (US$2.74 billion). Currently, a total of 40 stock and futures firms hold an average of 3 percent each, while only NH Investment & Securities holding 7.45 percent. The total amount of stock adds up to 20 million, and the price per share is estimated at 140,000 won (US$127.80).
Particularly, Korea Investment & Securities and KDB Daewoo Securities have even higher expectations. When the KRX pushed ahead with its IPO in 2005, 5 consortia of stock firms competed, and the consortium of Korea Investment & Securities and KDB Daewoo Securities received the highest points.
Since the consortium of Korea Investment & Securities and KDB Daewoo Securities had nothing to do with a halt of the IPO of the KRX, they will be still qualified.
Regarding the possibility of the IPO, the KRX said, “We don’t have a specific plan for that yet.” However, the industry thinks that it is just a matter of time, given the fact that the KRX has started advanced work to improve the company value, including the creation of new departments.
Park Sun-ho, an analyst at Meritz Securities, said, “Among major OECD countries, the KRX is the only unlisted company. The fact that alliances and cooperation among stock exchanges in other countries have become more common due to revitalization of the international capital market is another factor to legitimize the IPO of the KRX.”
In particular, the price book value ratio (PBR) of the KRX is 10 times higher than the exchanges of Hong Kong and Singapore, while its PBR is 3 times higher than the average PBR of European exchanges. Therefore, considering the relative valuation of the KRX compared with foreign stock exchanges, the KRX, which shows high stability and growth, will see the improvement of its value of holdings.