[Reporter’s Securities Filing Review] Innospace Pursues Consecutive Fundraising Just One Year After IPO

Decision on Third-Party and Rights Offerings After IPO
Satellite Launch Delays Lead to Poor Performance and Falling Share Price
"CEO Kim Sujong and Related Parties... Participating in Only About 7% of Allocated Shares"

Innospace has initiated a large-scale fundraising effort totaling 47 billion KRW. The company previously raised 57 billion KRW during its IPO last year and 30 billion KRW in March of this year. With these consecutive large-scale capital raises, investor dissatisfaction is expected to grow, as the continued decline in share price makes further dilution of share value inevitable.

According to the Financial Supervisory Service's electronic disclosure system on August 20, Innospace announced that it will conduct a paid-in capital increase worth 47.085 billion KRW through a rights offering followed by a public offering of forfeited shares. Of the funds raised, 10 billion KRW will be used to repay a bridge loan. Another 10 billion KRW will be allocated to facility investments, while 26.135 billion KRW will be used for operating expenses, including research and development costs.

At the time of its IPO, the company raised 57.589 billion KRW. During the institutional demand forecast, the offering price was set at the upper end of the desired range, at 43,300 KRW per share.

Additionally, in March of this year, Innospace conducted a third-party allocation paid-in capital increase worth 30.6 billion KRW. Venture capital firms such as IMM Investment, Shinhan Venture Investment, and STIC Ventures participated. They secured 1,490,860 convertible preferred shares (CPS), which can be converted into common shares at an issuance price of 20,525 KRW per share.

The funds raised in this way were quickly depleted. Of the funds secured through last year's IPO, 29.552 billion KRW was used for operating expenses, and 26.587 billion KRW was allocated to facility investments. Of the funds raised from the paid-in capital increase in March this year, 25.55258 billion KRW was used for operating expenses. The remaining 5 billion KRW was placed in savings and deposits. In summary, approximately 80 billion KRW was spent in just over a year.

Despite the significant capital invested, there was little achievement. The share price, which had risen to 46,050 KRW at the time of listing, has now fallen to 11,840 KRW. The company's performance followed a similar trend. Innospace had projected sales of 2 billion KRW for last year at the time of its IPO, but actual sales amounted to only 15 million KRW. The company had also forecasted an operating loss of 17.4 billion KRW, but ended up recording a deficit of 32.4 billion KRW.

The company explained, "The projects scheduled at the time of the securities registration statement have been postponed to after 2025, resulting in a discrepancy," and added, "Due to the high volatility in sales depending on the status of individual project contracts and their progress, it is still difficult to reliably estimate sales figures."

It also appears unlikely that the company will meet its targets this year. At the time of listing, Innospace had projected sales and operating profit for this year at 47.8 billion KRW and 1.8 billion KRW, respectively. This was based on expectations that the commercialization of launch services would begin in earnest with the commercial launch of the Hanbit-Nano model, which had a faster development schedule. However, in the first half of this year, the company recorded sales of 700 million KRW and an operating loss of 30.6 billion KRW.

For reference, the securities registration statement for this paid-in capital increase shows that the company has revised its performance forecasts. It now expects sales of 8.1 billion KRW this year, 122.4 billion KRW next year, and 221.3 billion KRW in 2027.

Performance improvement is expected to be possible. Ji-Soo Chung, a researcher at Meritz Securities, explained, "The Hanbit-Nano launch schedule has been postponed twice, from March to July and from July to September this year," and added, "Due to delays in launch approval from the Korea Aerospace Administration, a launch in October or November is more likely than September." She further stated, "Considering launch site reservations and government approval procedures, we forecast one launch in 2025, and a total of six launches in 2026, including four Hanbit-Nano and two Hanbit-Micro launches."

However, due to the large-scale capital increase, dilution of share value has become unavoidable. The newly issued shares from this Innospace offering total 4.3 million, accounting for 45.66% of the total 9,416,694 shares outstanding (excluding preferred shares).

The largest shareholder is also not expected to participate actively in this paid-in capital increase. According to the securities registration statement, "The largest shareholder, Kim Sujong, holds approximately 18.07%, and the combined stake of the largest shareholder and related parties is 18.13%," adding, "The largest shareholder and related parties plan to subscribe for about 6.6% of their allocated shares, so a drop of about 5% in their stake is expected."