The results of IPO (Initial Public Offering) demand forecasts are showing sharp divergence across companies. Entering the second half of the year, the number of companies setting their IPO prices at or below the lower end of the targeted range has doubled compared to the first half, while institutional promises to refrain from selling shares for a certain period post-listing have also significantly decreased.

According to the Financial Supervisory Service's Electronic Disclosure System and 38 Communication on the 21st, among the 41 companies (excluding SPACs) that conducted institutional demand forecasts this year, 32 finalized their IPO prices at the upper end of the targeted range, while 9 set them at or below the lower end. Companies setting prices at or below the lower end increased from 3 out of 20 companies in the first half to 6 out of 21 in the second half. All 3 companies that set their IPO prices lower than the targeted range appeared in the second half.

The mandatory holding commitment ratio—an agreement to not sell shares for a certain period after listing—has also plummeted. While the median commitment ratio for companies in the first half was 42.8%, it slumped to just 4.7% in the second half. The average institutional competition ratio also dropped from 1,013 to 1 in the first half to 655 to 1 in the second half.

IPO pricing results clearly varied depending on the institutional competition ratio. All 9 companies that finalized prices at or below the lower end recorded competition ratios of less than 400 to 1, with an average of 159 to 1. Conversely, all 29 companies that exceeded a 400 to 1 competition ratio finalized their IPO prices at the upper end.

Results have starkly diverged this week as well. T&E Korea, a high-speed turbo machinery company, recorded a competition ratio of 1,041.02 to 1 in its demand forecast, finalizing its IPO price at 15,300 KRW—the upper end of the targeted range (12,600 to 15,300 KRW). A total of 2,274 domestic and foreign institutions participated, with 99.4% of them submitting bids at or above the upper end. The mandatory holding commitment ratio stood at 29.5% based on applied quantities.

On the other hand, Creates, a golf launch monitor company, recorded a competition ratio of just 240.46 to 1, setting its IPO price at 15,000 KRW, the absolute lower end of the targeted range (15,000 to 18,000 KRW). Out of 831 participating entities, 52.2% (434 entities) offered prices lower than the bottom end. The mandatory holding commitment was limited to just a single private equity fund application totaling 5,000 shares (for a 15-day lock-up period).

As lock-up commitments have nearly dried up, pressure on lead underwriters has mounted. Under current regulations, underwriters are required to preferentially allocate at least 40% of institutional allotments to institutions that have committed to mandatory holding lock-ups. If they fail to meet this threshold, underwriters must directly acquire 1% of the public offering volume and hold it for 6 months. According to the Creates prospectus, lead underwriter Samsung Securities must accordingly acquire up to 14,000 shares (worth 210 million KRW). Earlier this year, companies like Chaevi also failed to meet the lock-up criteria, leaving underwriters to absorb the remaining shares.

Some analyses suggest that the recent sharp downturn in the stock market is influencing the atmosphere of demand forecasts. Yum Tae-woo, a manager at IR CUDOS, stated, "As the KOSPI has dropped sharply, institutions are failing to actively participate in IPO demand forecasts or are harboring cautious sentiments." He added, "IPO prices calculated during a bullish market require peer company share prices to back them up to make logical sense. When the market falls across the board, the gap widens. While some investors adjust IPO prices if they feel market drops haven't been reflected, we cannot generalize as every company's situation differs."

T&E Korea and Creates are conducting general public subscriptions on the 20th and 21st. This week, RevLab and EST are set to finalize their IPO prices on the 21st, while Yeonggwang is slated to release its demand forecast results. Next month on the 13th, the revised Capital Markets Act—which incorporates the pre-demand forecasting and cornerstone investor systems—will take effect. Manager Yum noted, "While the policy stance will be maintained, we must wait and see how practically effective investors will find it."

[ⓒ Global Economic Times. 무단전재-재배포 금지]