South Korea's IPO market poised for record year on booming retail demand

SK Biopharmaceuticals Co

08/01/2021 07:17

* S.Korea IPO market to be busiest ever in 2021 -bankers,
analysts
    * To raise as much as 20 trln won in IPOs, a record high
-analysts
    * More allocation to retail investors to boost demand
-analysts
    * Deals in pipeline include LG Energy Solution, SKIET backed
by EV
optimism

    By Heekyong Yang and Scott Murdoch
    SEOUL/HONG KONG, Jan 8 (Reuters) - South Korea is set for
the busiest year ever for new share sales as companies ranging
from a digital bank, game developer to an electric car battery
maker rush to take advantage of robust retail demand, bankers
and analysts said.
    Its IPO market could raise up to 20 trillion won ($18.40
billion), a record and about four times above 2020 levels, led
by firms providing products that are more in demand from people
stuck indoors due to the pandemic, analysts said.
    Also, a move by the country's financial regulator to
increase the allocation of IPO shares to retail customers this
year will drive up investment, they added.
    The projection comes against a recent rally in the main
KOSPI index  .KS11  to above 3,000 for the first time, with
investors looking towards a broad recovery in exports beyond
South Korea's tech titans.  urn:newsml:reuters.com:*:nL1N2JH008
    This is "shaping up to look like it could be a record year",
said David Chung, head of Korea investment banking at Goldman
Sachs. "The majority of big mandates and IPO themes are around
the technology sector."
    That includes companies that were offline but now, amid the
health crisis, have built up a significant online presence,
Chung added. "That is where the growth is."
    Deals in the pipeline include a potential 4.6 trillion won
float from KakaoBank, which has benefited from an inflow of
customers from South Korea's dominant chat app operator Kakao
Corp  035720.KS . Kakao has a 32% stake in KakaoBank. 
    KakaoBank has picked advisers but not decided when it will
list, a spokesman said.  urn:newsml:reuters.com:*:nL4N2IX065
    An estimated 9-trillion won share sale by Tesla supplier LG
Chem's  051910.KS  electric car battery unit is also in the
pipeline, according to an analyst.  urn:newsml:reuters.com:*:nL1N2HL02S
    The IPO size or timing has not been decided yet, an LG
Energy Solution official said. 
    South Korean companies raised about 4.7 trillion won via
initial public offerings in 2020, Korea Exchange data shows,
surpassing the past two years, but behind an all-time high of
about 10 trillion won reached in 2010.
        
    MORE SHARE SALES
    EV battery maker SK Innovation's  096770.KS  chemical
material unit SK IE Technology (SKIET) is also expected to make
its market debut this year, bankers and analysts said. 
    SKIET said it plans to complete the IPO process within 2021.
    Consumer demand for EVs has been relatively resilient, aided
by tighter environment regulations and the launch of new models.
    In South Korea, a "New Deal" economic initiative that pivots
on digital innovation and eco-friendly growth is burnishing the
appeal of EV-related stocks.
    Gaming company Krafton and SK Bioscience are also looking to
raise about 5 trillion won and 600 billion won, respectively,
this year, Seoul-based SK Securities said. 
    In October, Krafton picked advisers for its IPO with plans
to go public in 2021. A company spokeswoman said on Friday there
were no further details to share at the moment.
    SK Bioscience was not immediately available for comment. 
    Individual investors, who piled into the South Korean 
market last year, are trading at a pace not seen in years.
    In 2020, the KOSPI clocked its biggest rise since 2009 as
shares in companies like Samsung Electronics  005930.KS , the
world's biggest maker of memory chips, surged. 
    "The market right now is clearly attractive to retail
investors and it will likely attract more of them as IPO shares
allocation for retail investors has gone up to as much as 30%
from 20%," said Lee So-joong, an analyst with SK Securities.
 ($1 = 1,086.7300 won)

 (Reporting by Heekyong Yang in Seoul, Scott Murdoch in Hong
Kong; Additional reporting by Jihoon Lee, Joyce Lee; Editing by
Sumeet Chatterjee and Himani Sarkar)
 ((Heekyong.Yang@thomsonreuters.com; +82 2 6936 1470;))