Guidelines for Qualitative Review to Be Established and Released by Year-End
'ABCDEF' Sectors Including AI, Bio, and Contents to Benefit
VCs Anticipate Exits, but Some Say "KOSDAQ Normalization Comes First"
In line with the Lee Jaemyung administration's policy of fostering new growth engine industries, improvements to the technology-based special listing system are accelerating. By the end of this year, the review criteria will be revised to actively support the listing of companies in the so-called 'ABCDEF' industries-Artificial Intelligence (AI), Bio, Contents, Defense, Energy, and Factory (Manufacturing)-on the KOSDAQ market.
This has raised expectations for exits (investment recovery) among venture investors. However, some express concerns that without revitalizing the KOSDAQ market, these improvements will have limited effectiveness.
Clarifying Ambiguous Qualitative Review Criteria... "Not a Relaxation of Standards"
According to the Financial Services Commission and the financial investment industry on October 22, the Financial Services Commission is working to specify the qualitative review criteria for technology-based special listings. The technology-based special listing system allows companies with technological capabilities, but not yet sufficient profits, to be listed on the KOSDAQ market based on their technology and growth potential. Companies that pass a technology evaluation by an external professional agency undergo a preliminary listing review by the Korea Exchange, during which qualitative assessments such as business continuity, management transparency, and business stability are conducted in depth. There have been ongoing criticisms that the specific evaluation indicators for qualitative reviews have not been disclosed and that the standards are unclear. By the end of this year, detailed guidelines will be established and released to enhance predictability in the listing review process. This measure was previously included as part of the new administration's national agenda to achieve the 'KOSPI 5000 era.'
This move is expected to make it easier for promising startups and venture companies to prepare for initial public offerings (IPOs), leading to an increase in KOSDAQ listings. In particular, the six strategic industries identified by the new administration-AI, bio, contents, defense, energy, and manufacturing-are expected to benefit. A government official explained, "This measure is expected to strengthen the growth engine of the entire industry by discovering innovative technologies and enabling growing companies to raise capital." However, he added, "This is to ensure proper evaluation for technology-based special listings, not to lower the review standards."
VCs Expect Exits... "KOSDAQ Revitalization Must Happen Together"
Venture capitalists (VCs) and the venture investment industry have a positive outlook on these developments. They believe that specifying the evaluation criteria and activating listings will create a favorable environment for investment recovery and reinvestment cycles. An executive at a major VC said, "There is hope that the previously blocked exit route could finally open up."
On the other hand, concerns have been raised that without an overall revitalization of the KOSDAQ market, these improvements will have limited effectiveness. Even if the number of companies listed through the technology-based special listing system increases, if their stock prices fall below the initial offering price after listing, investment recovery will be difficult and the motivation for reinvestment will inevitably weaken. A VC CEO emphasized, "Currently, the KOSDAQ is dominated by individual investors, so even if companies are listed, there are not enough buyers. Institutional investors need to enter the market and the market's overall strength must be enhanced at the same time."
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