[2023 IPO Outlook] Companies Gauging Timing for Listing... Will They Flock in the First Half?

Withdrawal of Expected IPO Candidates Continues This Year
46 Companies Undergoing Preliminary Review
Possibility of Listings in the First Half of the Year

[Asia Economy Reporter Hyungsoo Park] The corporate initial public offering (IPO) market is expected to remain sluggish next year as well. With major countries around the world, including the United States, expected to continue raising benchmark interest rates, and the stock performance of newly listed companies on the domestic market this year being weak, the IPO market is being shunned by investors.

According to the Korea Exchange, 68 companies have been listed on the domestic stock market as of the end of November this year. Considering that SAMG Entertainment was listed on the KOSDAQ market on the 6th and BioNote aims to list within the year, the total number of newly listed companies this year is expected to reach 70. This represents a 23% decrease compared to the 91 companies listed last year.

In terms of amount, the public offering scale was 15.5 trillion won, down more than 4 trillion won from last year's 19.7 trillion won. Considering that LG Energy Solution raised 12.75 trillion won when it was listed earlier this year, the public offering scale has shrunk to pre-COVID-19 pandemic levels. This is a result of major companies such as Hyundai Engineering, Hyundai Oilbank, SK Shieldus, One Store, Golfzon Commerce, CJ Olive Young, and Lionheart Studio withdrawing their listing plans.

Typically, December is the busiest period for the IPO market, but this year only BioNote is preparing for demand forecasting. Most companies that have passed the preliminary listing review are adjusting their listing schedules. Companies that withdrew their listings this year may pursue listing again if the IPO market sentiment improves.

The problem lies in the financial capacity to absorb the volume of public offering shares. Due to rising interest rates in major countries worldwide and declines in stock market indices, demand for the IPO market has sharply decreased beyond the reduction in public offering supply. Eugene Hyung, a researcher at DB Financial Investment, explained, "The amount set in public offering funds, which can be seen as institutional demand for the public offering market, has decreased by 36.7% compared to the beginning of the year," and "customer deposits and margin loans, which can be seen as individual funds, have decreased by 33.1% compared to the beginning of the year."

Companies that need to raise external funds through listing face a crossroads. They must either lower their valuation to proceed with public offering subscriptions or endure until the IPO market sentiment improves. Many companies requiring external capital injections for various reasons are likely to pursue listing. Existing investors may also demand listing to recover their funds. If a new listing application is not submitted within six months from the date of notification of the preliminary listing review results, the preliminary review results will become invalid. Some companies that postponed their listings this year are expected to attempt listing by adjusting the public offering price and issuance volume.

As of the end of November, 46 companies are undergoing preliminary listing reviews, and 21 companies have been approved. Since many companies have been in the preliminary review and approval process for a long time, a variety of companies are likely to attempt listing in the first half of next year.

Companies such as K-Bank, Kurly, and Golfzon County, which originally aimed to list this year, are expected to pursue IPOs next year. There are also companies attracting attention due to their rapid growth. EcoPro Materials, a precursor material producer for cathodes used in secondary batteries, is a company benefiting greatly from the growth of the electric vehicle market. The upstream market is growing rapidly, requiring continuous expansion investments. In August, it selected Mirae Asset Securities as the lead underwriter and is pushing forward with its IPO. APR, which owns street fashion brand 'Nerdy' and derma skincare brand 'MediCube,' selected Shinhan Investment Corp. as its underwriter. Sales are rapidly increasing, led by MediCube. TMC, a special gas material company for semiconductor and display processes, recorded an average annual growth rate of 73.8% until last year since its establishment in 2015. TMC is considered a strong small and medium enterprise with the technological capability to carry out all processes domestically, from raw material procurement to manufacturing and quality assurance. It received preliminary review approval for KOSDAQ listing last month, four months after filing for preliminary review in early July.