2023 IPO Market Trends Analysis
Public Offering Amount Decreased by 78.8% to 3.3 Trillion
Impact of LG Energy Solution... Reflecting Base Effect
Last year, the number of IPOs increased compared to the previous year due to improved investor sentiment following the recovery of the initial public offering (IPO) market. Although the total public offering amount decreased by 78.8%, this was attributed to the base effect from the 2022 listing of LG Energy Solution.
According to the "2023 IPO Market Trend Analysis" released by the Financial Supervisory Service on the 27th, the number of IPO companies last year was 82, a 17.1% increase from 70 companies in 2022.
However, the total public offering amount fell from 15.6 trillion KRW in 2022 to 3.3 trillion KRW last year, a 78.8% decrease. This was due to the IPO of LG Energy Solution in 2022, which accounted for 12.7 trillion KRW of the total offering amount. Excluding this, last year’s public offering amount actually increased by 16% compared to the previous year.
Looking at the scale of IPOs last year, 62 small and medium-sized companies with offerings between 10 billion and 50 billion KRW, mainly on KOSDAQ, accounted for 75.6% of the total. There were 4 large IPOs in the 100 billion to 1 trillion KRW range, and no mega IPOs exceeding 1 trillion KRW.
The number of institutions participating in demand forecasting last year was 1,507, a 54.4% increase from 976 in the previous year. During the same period, the demand forecast competition rate rose by 10.6%, from 836 to 925 to 1. The proportion of cases where the public offering price was set above the upper limit of the desired price range during demand forecasting was 74.4%, up 20.2 percentage points from 54.2% the previous year.
Due to the introduction of a preferential allocation system for mandatory lock-up shares, the ratio of mandatory lock-up shares among institutional investor allocations increased by 3.7 percentage points, from 22.7% to 26.4%. Last year, institutional investor allocations were composed of asset management companies (funds) at 56.8%, foreigners at 11.1%, others at 20.6%, and pension funds and banks at 7.8%.
The subscription competition rate rose 20.7% from 775 to 1 in the previous year to 934 to 1. The initial price return on the listing day compared to the public offering price increased by 52 percentage points, from 30% to 82%, and the closing price return rose by 44 percentage points, from 28% to 72%.
Among the five IPOs that recorded the so-called "ttattabl" (four times the public offering price) on their first day of listing since December last year, two maintained closing prices above the listing day’s closing price as of the 21st, but three recorded losses of -49.7% compared to their listing day.
The Financial Supervisory Service stated, "Investors need to be cautious of sharp price fluctuations caused by increased volatility on the listing day," and added, "The Financial Supervisory Service plans to continue its review work under the principles of investor protection while promoting market communication."
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