IPO Proceeds Halve, but Opening-Price Gains Hit 126%... The Paradox of a 'Deal Drought' [fn Market Watch]

[Financial News] This year's initial public offering (IPO) market saw the total offering size shrink sharply, while investor enthusiasm for newly listed stocks grew even stronger. IPO proceeds in Q1-Q3 fell to about half their level from the same period last year, but the average opening-price gain of newly listed companies over their IPO prices reached 126.8%. As the supply of IPOs declined, investment funds increasingly concentrated in a limited number of public offerings.
According to IR Qders' "2026 Cumulative IPO Review for the Third Quarter," released on the 30th, 33 companies had newly listed in Q1-Q3 this year, with Duksan Navcours the latest. One listed on the KOSPI Composite Index and 32 on KOSDAQ (Korea Securities Dealers Automated Quotations). SPACs, KONEX listings and relistings were excluded.
Total IPO proceeds came to 1.6312 trillion won. Compared with 55 companies and 3.4028 trillion won in the same period last year, the number of newly listed companies and IPO proceeds fell by 40.0% and 52.1%, respectively. The absence of a large-scale, trillion-won IPO this year was also a major factor, unlike last year when LG CNS raised 1.1994 trillion won. The mood, however, has shifted in the second half of the year. Of the 33 companies newly listed this year, 16, or 48.5%, listed in Q3. The IPO supply that had frozen in the first half has begun to thaw, led by small and mid-sized KOSDAQ deals.
Despite the decline in supply, strong amounts of capital continued to flow into newly listed stocks. The average opening-price gain over the IPO price reached 126.8%, up 61.2 percentage points from 65.6% in the same period last year. The average subscription ratio among retail investors also stood at 1,316.2 to 1, surpassing last year's 976.6 to 1. Of the 33 companies, 21 recorded subscription ratios of at least 1,000 to 1.
In institutional demand, holding commitments stood out more than competition ratios. The average bookbuilding competition ratio was 813.1 to 1, slightly below last year's figure, but the average mandatory holding commitment ratio jumped from 9.7% to 27.2%. This is viewed as the result of an increase in institutional allocations subject to commitments to hold the shares, following the introduction of the priority allocation system for such commitments.
Meanwhile, the investment banking industry is focused on the fourth quarter. Applications for preliminary listing reviews rose from 11 in Q1 to 37 in Q2 and totaled 29 in Q3. The assessment is that the IPO pipeline is being replenished, led by small and mid-sized KOSDAQ companies.
The introduction of pre-demand forecasting and the cornerstone investor system is another variable. As companies seeking to complete their listings under the existing procedures before the new systems take effect overlap in their schedules, public offering timetables could become concentrated in the early and middle parts of Q4.
An investment banking industry source said, "Although IPO proceeds have fallen sharply from last year, the number of listings has increased since Q3, and investment demand has remained strong. Companies seeking to complete their listings before the regulatory changes could converge in Q4, so the key question is whether the recovery in small and mid-sized IPOs will continue."
[email protected] Kim Kyung-ah Reporter