No Overwhelming Leader in IPO Market Slump
Seoul Guarantee, Doosan Robo, SK Eco Expected to See Mixed Fortunes
The initial public offering (IPO) market, once dominated by major domestic securities firms and foreign securities companies, is now in a state of fierce competition without a clear number one this year. With the disappearance of large-scale IPOs exceeding 1 trillion won, domestic securities firms have only recorded small-scale public offerings around 100 billion won. The fortunes of securities firms are expected to diverge depending on the performance of major companies such as SK Ecoplant, which have filed for preliminary listing review in the second half of the year.
IPO Market Only 1.5 Trillion Won by Mid-August
According to the investment banking (IB) industry on the 17th, the total amount raised through IPOs from January to August 11 this year slightly exceeds 1.5 trillion won. Considering that 14.2 trillion won worth of IPO shares were issued during the same period last year, the size of the IPO market has shrunk to about one-tenth. While last year’s IPO market was dominated by mega deals worth tens of trillions of won such as LG Energy Solution, this year, except for some REITs (real estate investment trusts) listings, most IPOs have been for KOSDAQ companies raising less than 100 billion won.
The IPO underwriting performance of securities firms also continues without a clear dominant leader. Korea Investment & Securities currently ranks first, having underwritten 368 billion won worth of IPOs including Padoo (co-underwriter), Samsung FN REITs, and Hanwha REITs. Mirae Asset Securities follows with 234 billion won worth of IPOs for KOSDAQ companies such as Phil Energy, TrueEn, and LB Investment, without any underwriting on the KOSPI market.
Only a few securities firms have underwritten IPOs exceeding 100 billion won, following the top two firms: NH Investment & Securities, Samsung Securities, and Hanwha Investment & Securities. NH Investment & Securities recorded underwriting performances for Padoo (135 billion won), Samsung FN REITs (co-underwriter 20 billion won), and Almek (50 billion won). Samsung Securities underwrote Samsung FN REITs, Gigabus, and Geumyang Green Power, while Hanwha Investment & Securities managed listings for Hanwha REITs and TMC.
KB Investment & Securities, which ranked first last year by underwriting LG Energy Solution and others, has fallen out of the top 10 with only one co-underwriting deal for Samsung FN REITs. Shinhan Investment & Securities, which was third last year with LG Energy Solution (co-underwriter) and WCP underwriting, ranked ninth this year with just three KOSDAQ company IPOs: CU Box, Mirae Semiconductor, and Secusen. From sixth to eighth place, mid-sized securities firms strong in IPOs such as Daishin Securities, Kiwoom Securities, and Shin Young Securities filled the ranks.
Foreign securities firms such as Morgan Stanley, Merrill Lynch, Goldman Sachs, and Citi Global Markets Securities have not managed any IPO underwriting deals this year. The disappearance of big deals exceeding 1 trillion won has left no role for foreign securities firms, including recruiting foreign investors. If Doosan Robotics succeeds in entering the KOSPI, Credit Suisse (CS), acquired by UBS, will be the only foreign securities firm to record domestic IPO underwriting performance.
An IB industry insider evaluated, "Compared to KB Securities underwriting 3.49 trillion won worth of IPOs alone last year, this year’s IPO performance rankings are of little significance." The insider added, "It is almost as if 17 to 18 securities firms are dividing a small market of 1.5 trillion won until August this year," and said, "The market size based on fees is only about 15 billion won (1%)."
Ranking Expected to Fluctuate Sharply Depending on Success of Trillion-Won Mega Deals Entering the Stock Market
The rankings of securities firms’ IPO underwriting performances are expected to fluctuate sharply depending on the success of trillion-won mega deals preparing to enter the stock market in the second half of the year.
According to the Korea Exchange, companies such as Ecopro Materials (underwritten by Mirae and NH), Doosan Robotics (underwritten by Korea, Mirae, KB, NH, Credit Suisse), Seoul Guarantee Insurance (Samsung, Mirae), and Dongin Kiyun (NH) have filed for preliminary listing review to enter the KOSPI. NICE Information Service (Daishin) has passed the preliminary listing review, and Nextil (Hana) will enter the KOSPI on the 21st. SK Ecoplant (NH, Citi, CS, Samsung, Korea) is reportedly reviewing filing for preliminary listing review.
In terms of big deal underwriting, Mirae Asset Securities is clearly ahead. However, considering SK Ecoplant as well, NH Investment & Securities holds a considerably advantageous position. An industry insider predicted, "Depending on the success of the big IPOs in the second half, the rankings of securities firms’ underwriting performances this year will also see changes."
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