Research Alarm: "Only the Underwriter Benefited from Theborn Korea's IPO"

On May 12, Research Alarm analyzed that the underwriter set a high IPO price for Theborn Korea based on its past performance and rosy growth outlook.

Theborn Korea's share price reached an intraday high of 64,500 won on the day of its listing. However, it subsequently turned downward, dropping to 26,300 won on the 9th, a decline of -59.22% from its peak. Compared to the IPO price of 34,000 won, this represents a decrease of -22.65%.

Choi Seonghwan, a researcher at Research Alarm, stated, "Even before the listing, there were structural limitations in the franchise industry and a series of delistings among existing franchise companies," adding, "Theborn Korea was overvalued at listing due to excessive reliance on personal brand value."

He continued, "The low-priced coffee franchise sector was entering maturity, raising significant doubts about growth and profitability," and added, "The underwriter did not actively reflect these concerns."

Furthermore, he emphasized, "Institutional investors participating in the demand forecast submitted bids above the upper end of the IPO price band, resulting in the final IPO price being set at 34,000 won, exceeding the initial price range of 23,000 to 28,000 won."

Choi explained, "After Theborn Korea's listing, the share price plummeted, resulting in a structural issue where only individual investors who bought at the peak suffered losses." He added, "Owner risk, which had previously been overlooked, is now materializing, and the brand's credibility is rapidly declining due to controversies over exaggerated advertising and abusive behavior on broadcasts."

He also noted, "The underwriter's commission rate warrants attention," explaining, "Theborn Korea paid approximately 4.8% of the total IPO proceeds, or about 4.9 billion won, as underwriter commission." He pointed out, "This is significantly higher than the average commission rate for companies that went public this year." He further stated, "Despite having a stable enough financial structure to meet the listing requirements for the KOSPI market and successfully setting the IPO price above the upper end of the expected range through strong demand forecasting, the company paid one of the highest commissions in the industry."

Choi commented, "With investor losses mounting due to the poor post-listing share performance, it is questionable whether the 'commission premium' paid during the listing process was truly justified." He added, "To protect investors and restore market trust, a comprehensive review of the responsibilities of underwriters and the overall commission structure is needed going forward."