South Korea’s initial public offering market is recovering as EcoPro Materials Co., Doosan Robotics Inc. and other newly listed jackpot shares attract investors seeking higher returns given the range-bound main stock market.
Values of 21 stocks out of 30 shares listed in the fourth quarter have been staying higher than their IPO prices, according to the Korea Exchange on Wednesday.
Some of them provided eye-popping profits to investors. Shares in EcoPro Materials, a unit of South Korea’s major electric vehicle battery materials producer EcoPro Group, soared 264% between when it went public on Nov. 17 and Dec. 5, while stocks in Doosan Robotics, a unit of local conglomerate Doosan Group, have surged 214%.
Green Resource Co., an engineered and advanced materials supplier listed on Nov. 24, has enjoyed a 75.3% jump in its share price.
The domestic IPO market has been quickly recovering since the listing of EcoPro Materials on the benchmark Kospi, financial market sources said.
Few had expected the shares of the precursor maker to be in the spotlight, given tepid demand among institutional and retail investors before the listing. The IPO was oversubscribed by only 17.2 times during its bookbuilding for institutional investors and 70 times for individuals.
The stocks’ trading in value has totaled 12.2 trillion won ($9.3 billion) since the IPO, topping the $7.5 billion of Samsung Electronics Co. with the highest market capitalization in the country.
“That is retail investors’ victory,” said Ahn Jung-hwan, CEO of Interlace Asset Management Co. “Individual investors also appeared to chase the stocks expecting them to be included in the Kospi 200 Index, which is predicted to attract passive funds.” EcoPro Materials' Kospi debut ceremony on Nov. 17, 2023 (Courtesy of EcoPro Materials) The Kospi 200 Index includes the 200 largest companies listed on the main bourse and covers about 93% of the total market value. A passive fund is an investment vehicle that tracks a market index, or a specific market segment, to determine what to invest in.
REVIVING IPO MARKET
Other companies such as LS Materials Ltd. with IPO plans enjoyed the fever. LS Materials, an energy storage device maker, attracted more than 10 billion won from individual investors in subscription deposits for its planned listing on the junior Kosdaq later this month.
“Investors appeared to focus more on IPOs as the secondary market has been in a tight range,” said an official at an IPO manager. The Kospi has gained 1.2% so far this quarter moving around the 2,500 mark.
The local IPO market had been sluggish with many companies such as Seoul Guarantee Insurance dropping their listing plans as higher interest rates sour investor sentiment.
Only seven companies have gone public on the Kospi so far this year, exceeding five in 2022 but falling short of 16 listing in 2021, the boom year of IPOs.
LG CNS Co., the information technology service provider of South Korea’s No. 4 conglomerate LG group, and SK Ecoplant Co., the construction unit of the No. 2 conglomerate SK group, had planned IPOs this year.
They have yet to determine their IPO schedules due to differing views over their corporate values.
