[Exclusive] Kurly and Golfzon County Crossing the 'IPO Threshold' as Trillion-Won Giants... Will They Bring Warmth to the IPO Market That Faced a Cold Spell? (Comprehensive)

On the afternoon of the 22nd, Korea Exchange Listing Disclosure Committee Meeting, Preliminary Listing Review
Kurly and Golfzon County 'Likely Approved' Expected to Pass the First Listing Hurdle
Painful Process Expected for Valuation Until Final Listing

[Asia Economy Reporter Lee Seon-ae] Kurly and Golfzon County, considered 'trillion-won giants,' will finally undergo the first hurdle of listing, the 'preliminary listing examination,' on the afternoon of the 22nd. Having met the conditions set by the Korea Exchange, they are expected to pass the preliminary examination smoothly. Given that their corporate values reach into the trillions, if they successfully complete the final listing, it is anticipated that warmth could return to the severely contracted initial public offering (IPO) market. 'IPO Giants' Kurly and Golfzon County Pass Preliminary Examination... Struggles Ahead Until Final Completion

According to the financial investment industry on the 22nd, the Korea Exchange will hold a listing disclosure committee meeting in the afternoon to review the listing approval for Kurly and Golfzon County. Kurly and Golfzon County filed for preliminary examination with the Stock Market Division on March 28 and April 22, respectively. Considering that the preliminary examination usually takes about two months on average, both companies have waited a long time to undergo the preliminary examination. This is because time was needed to meet the Exchange's conditions. Accordingly, approval is expected to be granted smoothly.

In Kurly's case, it is reported that they have submitted to the Exchange the mandatory holding commitment letters from financial investors (FIs), which had been a stumbling block in the review, along with the first half of this year's performance and financial status. The mandatory holding commitment letter contains a promise from Kurly's FIs not to sell their shares for a certain period and to exercise voting rights jointly.

The Exchange, considering that founder Kim Seul-ah's stake is low at 5.75%, has required Kurly's FIs to commit not to sell their shares for at least 18 months and to jointly exercise voting rights over more than 20% of the shares. This is because the founder and current CEO Kim holds a very low stake, which poses risks to management rights after listing, so this is to ensure stable management rights for a certain period. More than 50% of Kurly's shares are held mostly by foreign FIs, including Hillhouse Capital (11.89%), Sequoia Capital (10.19%), DST Global (10.17%), Aspex Capital (8.48%), and Euler Capital (6.73%).

An IB industry official said, "Kurly has obtained mandatory holding commitment letters from FIs for the listing review and submitted related documents to the Exchange. It is known that there are no issues with management or financial conditions, so approval of the review is expected."

Golfzon County's preliminary examination took time due to the Exchange's judgment to assess the sustainability of operations based on first-half performance. An IB industry official said, "The Exchange plans to focus on the first-half performance to see whether Golfzon County, which operates many golf courses on consignment, can maintain operational sustainability stably. Since the performance was good and listing requirements were met, the review is expected to pass smoothly," he hinted.

Golfzon County operates 18 golf courses nationwide, of which 10 are directly managed and 8 are leased. The total number of holes is 387. It holds an overwhelming No. 1 market share domestically. According to the consolidated audit report, Golfzon County's operating profit increased from 11.2 billion KRW in 2018 to 38.1 billion KRW in 2019, 62 billion KRW in 2020, and 104.8 billion KRW in 2021. The first half of this year's performance is also expected to have grown.

Golfzon County AnseongW

Although they will clear the 'listing hurdle' this afternoon, considerable difficulties are expected before completing the final listing. In Kurly's case, it seems necessary to lower its valuation. At the time of pre-IPO investment (equity investment before listing), the company was valued at 4 trillion KRW, but the current market value has dropped by more than half. The IB industry says Kurly must significantly lower its target market capitalization to successfully complete the public offering. Golfzon County's largest shareholder is Korea Golf Infrastructure Investment, a special purpose company (SPC) established by MBK Partners, and Golfzon Newdin Holdings is the second-largest shareholder. Since MBK Partners holds more than half of the shares, there is a strong view that Golfzon County should refrain from 'bomb dividends to major shareholders before listing' and 'excessive proportions of old share sales' to complete the final listing.

However, if the final listing is achieved, it is expected to create a positive atmosphere in the IPO market. As of the first week of this month, only 30 companies have been approved for listing after public offerings, including 3 on KOSPI and 27 on KOSDAQ. This is only about a quarter of last year's 112 companies (23 on KOSPI and 89 on KOSDAQ). Currently, 22 companies have passed the preliminary listing examination this year and have not decided whether to withdraw. The decrease in listed companies compared to previous years is due to recent stock market downturns and frozen investor sentiment in the IPO market. This year, four companies?Hyundai Oilbank, SK Shieldus, One Store, and Taelim Paper?have withdrawn their public offerings.