The lackluster South Korean stock market and softening Korea won have put off domestic companies from raising money at home and pushed some of them to look abroad in search of funds.
Companies listed on the Korean stock market have raised a total of 4.6 trillion won ($3.3 billion) in rights offerings so far this year, according to the Korea Exchange. For all of 2024, their rights issues are forecast to be the lowest amount since notching 3.2 trillion won in 2012.
That compared with 13.8 trillion won and 17.1 trillion won they attracted in rights issues in 2017 and 2020, respectively, when the Kospi and Kosdaq indexes were on an upward run. The figures marked the largest and second-largest rights offerings in South Korean stock market history.
The Kospi index has dropped 9.0% since the start of this year as of Nov. 15, the worst performer among major Asian stock markets. The Kospi has been trapped in a range between 2,200 and 2,900 since 2023.
Kospi-listed companies were traded at an average of 0.85 multiple of their book value on Nov. 15, their lowest this year.
The won currency weakened to 1,406.65 per dollar on Nov. 12, compared with 1,293.5 at the end of 2023. On Nov, 15, it pared some losses to close domestic trade at 1,398.20 against the US currency.
DELISTING
Some companies found no merit in staying listed and chose to go private.
Eight companies have already delisted, or are in the process of delisting through tender offers for their shares this year, according to the Korea Exchange. The number is double that of last year.
Among them are SK Rent A Car Co., cement maker Ssangyong C&E Co., medical device maker Jeisys Medical Inc. and software developer Connectwave Co., as well as software company BusinessOn Communication Co. and food container maker Lock&Lock Co.
SBI FinTech Solutions Co. on Nov. 15 embarked on the process of delisting from the Kosdaq junior market. The company is a majority owned by Japanese financial services group SBI Group.
“We can reduce costs we spend to stay listed,” said an official at SBI FinTech Solutions. “It was not necessary for us to raise money in the public market.”
IPOs
A total of 50 companies went public on the Kosdaq junior market this year. However, the tally is expected to drop from last year’s 77, even including the companies preparing for a Kosdaq debut later this year.
After dropping a domestic IPO in October, Viva Republica, the operator of the fintech platform Toss, is seeking a US market debut. The same month, K Bank, a South Korean online bank, cancelled its IPO.
Viva Republica, travel and accommodation booking app Yanolja and KKR-backed online fashion platform Musinsa are considering US listings. Essex Solutions, a winding wire manufacturer under LS Cable & System Co., is weighing a US IPO next year.
“The atmosphere in the Korean stock market is like treading on thin ice due to the soaring dollar value and poor earnings of major companies,” said a listed Korean company’s finance team head.
“There are growing concerns about how to maintain our corporate value and how to raise money,” he added.
By Ik-Hwan Kim and Jeong-Cheol Bae
lovepen@hankyung.com
Yeonhee Kim edited this article
