On the First Day of Listing, Closing at 41,700 Won from the 60,000 Won IPO Price
Listing Proceeded Despite... Reconfirming the Unstable Market Sentiment
[Asia Economy Reporter Kwangho Lee] WCP, a secondary battery separator manufacturer that was considered a major IPO "whale" in the second half of this year, started with a performance below expectations from the first day of listing and continued an unstable trend. Analysts attribute the decline in stock price to the flood of public offering shares without lock-up restrictions.
As of 9 a.m. on the 30th, WCP opened at 54,000 KRW, 10% lower than the public offering price of 60,000 KRW. Afterwards, the stock price fell 15% compared to the opening price and plunged to the 45,000 KRW range. Due to the flood of sell orders at the opening, WCP closed the first trading day at 41,700 KRW, a sharp drop of 12,300 KRW (22.78%). At one point during the session, the 40,000 KRW level was breached, falling to as low as 39,900 KRW.
Investors who received shares at the public offering price of 60,000 KRW suffered a loss of -30.5% based on the closing price that day.
Amid the recent continuous sharp decline in the stock market, institutional investors trying to reduce losses are believed to have sold large amounts of IPO shares, contributing to the stock price drop. On WCP’s first day of listing, the number of freely tradable shares was about 10.77 million, accounting for approximately 31.7% of the total shares. Based on the public offering price of 60,000 KRW, this amounts to about 646 billion KRW.
Among the approximately 5.37 million shares allocated to institutional investors, 83% can be sold immediately after listing. This is because only 4% of institutional investors applied for a lock-up agreement, promising not to sell shares for a certain period after receiving the IPO shares.
Due to the low demand forecast competition rate of 33 to 1, it is known that small and medium-sized investment management firms were also allocated IPO shares ranging from tens of billions to hundreds of billions of KRW.
The stock price decline is expected to inevitably cause losses for financial investors (FIs). DS Asset Management reportedly purchased WCP shares held by No & Partners last year at around 86,000 KRW per share. KB Securities, the lead underwriter, also holds about 250,000 shares (0.75%) of WCP stock.
Individual investors who received IPO shares can reduce losses by exercising a put-back option. The put-back option is the right to sell shares back at 90% of the public offering price if the stock price falls within six months after listing. Investors can apply to the securities company where they applied for the IPO shares to exercise the put-back option. However, shares must be traded through the securities company where the IPO was applied for; if shares have been transferred to another securities company, exercising the option is not possible.
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