South Korean listings volume to reach record highs

Jul 28, 2015
<p>Companies tempted by higher stock prices and relaxed listing rules</p>

The volume of IPOs in South Korea’s capital markets looks set to reach record levels later this year, according to both Korea Exchange (KRX) and research conducted by Dealogic, as issuers begin to realize the potential for fundraising in the region.

According to Dealogic’s data on IPOs in South Korea, there were 19 new listings collectively worth $992 mn in the first half of 2015, some way ahead of the six deals worth $339 mn placed a year earlier.

Of this year’s 19 IPOs, six – including Mirae Asset Life Insurance’s $307 mn listing in June and NS Home Shopping’s $184 mn IPO in March – were hosted on the main bourse, while the remainder went public on the junior KOSDAQ market. Six companies went public in the past month alone, including car manufacturer Hyundai’s advertising arm, Innocean Worldwide, which raised $300 mn.

Yoon Ki-joon, a director at KRX, also expects to see many more new listings in the near future, with the exchange anticipating 20 companies to list on its main bourse, and 100 more set for KOSDAQ listings.

‘There is pent-up demand for IPOs after several years of stagnation,’ says Yoon, as reported by the Financial Times. ‘More companies are tapping the market as listing rules have been eased and stock prices have been leveled up.’

Though the KOSDAQ market itself has gained more than 40 percent in the last 12 months, many market commentators believe it is KRX’s relaxed listing rules that are attracting many more foreign listings.

The country’s Financial Services Commission launched a ‘deregulation package’ in July 2014 that was largely welcomed by issuers and the investment community alike. It included a tweak to KRX’s listing guidelines to attract companies with strong growth potential in sectors including telecoms, biotechnology and healthcare, by allowing them to list even if their current financial standing was not quite up to scratch.

As a result, South Korea experienced a huge increase in M&A activity in 2014, notching up $25.3 mn worth of deals in the first quarter and $32.2 mn in the second, with funds flowing in from China, Hong Kong and Taiwan in particular.

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