IPO market cools amid crackdown on dual listings; new listings and fundraising cut in half

\r\n[Financial News] Despite the stock market rally, the IPO market is feeling cooler. The government's tougher stance on regulating dual listings is weighing on listing schedules and deal structures.
According to the Korea Exchange (KRX) on the 17th, 20 companies had gone public in Korea from January 1 through the 15th of this month. That is down 47.4% from 38 new listings in the same period last year. Total funds raised through public offerings also fell 52.9% to 1.0079 trillion won from 2.1417 trillion won a year earlier.
The slowdown became even more evident this month. As of the 15th, only two companies had newly listed, far below the nine seen in the same month last year. Over the same period, funds raised dropped 82.3% to 38 billion won from 214.6 billion won. With fewer large offerings, the market's overall scale has shrunk.
Still, demand for listings has not disappeared entirely. So far this year, 26 companies, excluding SPACs, have applied for preliminary review through the 15th, matching the level of the same period last year. IPO demand remains, but the pace of completing actual listings is slowing.
Market participants say the tougher rules on dual listings are affecting the decisions of companies preparing to go public. Financial authorities are pushing ahead with a regulatory overhaul aimed at easing the Korea discount by, in principle, restricting cases where a subsidiary lists after its parent company is already listed. As a result, IPOs involving spin-off subsidiaries or companies closely tied to their parent firms are likely to face greater scrutiny.
Some companies once seen as major IPO candidates are reportedly adjusting or reconsidering their listing timelines. LS Group had been pursuing a listing for its subsidiary LS Essex Solutions, but withdrew the preliminary review application it had submitted to the KRX amid controversy over dual listings and backlash from minority shareholders. SK ecoplant, HD Hyundai Robotics, and CJ Olive Young are also seen as potentially affected by the policy shift. With detailed criteria still undecided, more companies appear to be waiting and watching rather than pushing ahead with listings, while weighing review standards and market reaction.
The IR industry says tighter dual-listing rules have made it harder for IPOs to be used as a routine way to raise funds or exit investments, as they once were. Since financial authorities plan to finalize detailed review standards by the second quarter and begin enforcing the system in July, companies may continue to stay on the sidelines until the guidelines are set.
An IR industry official said, "If dual-listing rules are tightened, it will be difficult to pursue a listing based on growth potential alone," adding, "It will become more important to explain why a listing is necessary, how existing shareholders will be protected, and whether the company can operate independently from its parent."
The official added, "As the bar for listings rises, more companies may consider other fundraising options, such as private equity investment or attracting strategic investors, instead of relying on IPOs."
koreanbae@fnnews.com Bae Hangeul Reporter