Due to increased market uncertainties such as inflation, the amount raised through initial public offerings (IPOs) last year decreased by more than 20% compared to the previous year.
According to the "2022 IPO Market Trend Analysis" released by the Financial Supervisory Service on the 27th, the amount raised last year was 15.6 trillion won, down 20.7% from 19.7 trillion won the previous year, marking the first decline in four years since 2018. The number of IPO companies was 70, a decrease of 21.3%.
The decline in IPO performance last year was caused by a reduction in large-scale IPOs exceeding 1 trillion won. There was only one large IPO over 1 trillion won, LG Energy Solution (12.75 trillion won), compared to six in 2021. The number of IPOs between 100 billion and 1 trillion won also decreased to four from 11 in 2021.
The number of IPO withdrawals last year rose significantly to 13 cases, compared to two in 2021. This is the highest in the past five years. The scale of withdrawn IPOs was mainly between 100 billion and 1 trillion won, with eight companies abandoning their listings. The industries involved were diverse, including construction, biotechnology, telemarketing, and IT.
The number of institutions participating in demand forecasting and the demand forecast competition rate also dropped sharply. Last year, 976 institutions participated in demand forecasting, down 23.2% from the previous year, and the demand forecast competition rate fell from 1,193 to 836 to 1. Due to the decline in demand forecast competition rates, the proportion of public offering prices set above the upper band decreased from 86.5% to 54.2%, while the proportion set below the lower band increased from 13.4% to 42.9%.
Due to weakened competition among institutional investors, the proportion of lock-up commitments fell to 22.3%, down from 33.6% the previous year. Asset management companies received the largest allocation at 39.6%, followed by foreigners at 26.4%, others at 24.3%, pension funds and banks at 7.5%, and investment trading and brokerage firms at 2.3%.
Additionally, the average subscription competition rate among general investors last year was 775 to 1, down 31.8% from the previous year. Subscription deposits totaled 587 trillion won, a decrease of 25.1%.
The average closing price return on the listing day compared to the public offering price was 27.7%, about half of the previous year's level, and the year-end average closing price return was -1.4%, the lowest in the past five years.
The number of KOSDAQ special listing companies was 29, down seven from the previous year, accounting for most of the nine-company decrease in total KOSDAQ listed companies. This is interpreted as a result of investors' increased risk aversion due to interest rate hikes, leading to more conservative evaluations of growth potential and future value.
A Financial Supervisory Service official stated, "We will continue to make efforts to support companies' smooth fundraising and enhance investor protection," adding, "We will support the smooth establishment of the 'IPO Soundness Improvement Plan' currently being promoted to induce appropriate public offering price calculation, and strengthen reviews so that investors can sufficiently understand important information related to the management status of listed companies through business reports even after the IPO."
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