South Korea’s moribund initial public offering (IPO) market is springing back to life with a wave of high-profile companies set to go public, betting that a resurgent stock market and improving investor sentiment will sustain into next year.
According to investment banking sources on Tuesday, a string of large unlisted firms, including KKR Co.-backed fashion platform Musinsa and beauty company Gudai Global, have begun formal preparations to list, each eyeing valuations of at least 10 trillion won ($6.8 billion).
The revival marks a sharp turnaround from the subdued offerings of the past two years, when volatile markets forced several companies to shelve their plans.
“The consensus across the market is that now is the best time to move,” said a senior IPO banker in Seoul. “We expect next year’s IPO market to enter a full rebound phase.”
BIG NAMES RETURN TO MARKET
After a year of drought in large-cap listings – LG CNS Co. being the only company valued above 1 trillion won to float in 2024 – the pipeline for 2025 is swelling fast.
LivsMed, a biotech unicorn, or a startup valued at least 1 trillion won, is preparing for retail subscriptions early next month to buy IPO shares, while LS Group affiliate Essex Solutions, a magnet wire specialist, is undergoing preliminary review for a Kospi debut.
Some others are returning for a second or third attempt.
Internet lender K Bank recently filed for preliminary IPO review with the Korea Exchange after two previous failed tries, while CJ Olive Young, which once considered merging with its parent CJ Corp., has opted to revive its long-delayed listing plan amid a rebound in beauty stocks.
Should these offerings proceed as planned, analysts project that total IPO proceeds next year could surpass the latest peak of 15.6 trillion won seen in 2022.
FROM SLUMP TO SURGE
The rebound in IPO momentum reflects the turnaround in equity markets.
Shares have rallied sharply since mid-year, reversing the gloomy sentiment that forced DN Solutions Co. and Lotte Global Logistics Co. to scrap IPOs in the first half of this year.
The Kospi market, which has been hovering around record highs in recent months, has encouraged issuers to seek higher valuations and investors to chase fresh deals, analysts said.
Regulatory uncertainty has also eased.
After several test cases involving cross-market listings and spin-offs, the Korea Exchange has clarified key listing criteria, prompting a backlog of large corporate groups to resume IPO planning.
BEAUTY, FINTECH, AI LEAD THE CHARGE
Much of the new IPO activity is concentrated in fast-growing sectors such as beauty, fintech and artificial intelligence.
Gudai Global, owner of the hit skincare brands TirTir and Beauty of Joseon, is preparing to send out requests for proposals (RFPs) to underwriters, with bankers estimating Gudai’s potential valuation near 10 trillion won, called a decacorn at such a valuation.
Musinsa, another decacorn candidate, is expected to pick its IPO lead manager by the end of this month, while Upstage, an AI startup known for its large language model (LLM) capabilities, has begun its own listing process, targeting a valuation above 2 trillion won.
LIQUIDITY, POLICY TAILWINDS
With the stock market currently experiencing a boom, there are high expectations that a period of unprecedented liquidity, similar to what was seen in 2021-2022, will unfold.
The annual fundraising amounts in the IPO market reached 19.7 trillion won in 2021 and 15.6 trillion won in 2022. In the following two years, however, the amounts stood at less than 4 trillion won.
Retail liquidity is on the rise again.
Investor deposits classified as stock market cash stood at a record 85.5 trillion won at the end of October, up nearly 58% from the end of 2024, according to the Korea Financial Investment Association.
That flood of funds, coupled with the government’s continued push for equity-market reforms, including a proposed looser taxation for dividend income and incentives for venture capital, has raised expectations for a boom year ahead.
“The government is clearly driving policies to revive the capital and stock market and expand risk capital supply,” said an asset manager at a Seoul-based investment firm. “Investor appetite for new issues is the strongest it has been in years.”
RECENT IPOs SHOW GOOD PERFORMANCE
With the stock market booming, demand for IPOs has clearly revived.
Of the 26 companies that have conducted demand forecasting with plans to go public in the second half, 25 set their IPO prices at the upper end of their desired range.
Myungin Pharm Co., which attracted an IPO amount of around 200 billion won, saw strong interest, with over 2,000 institutional investors offering prices above the upper end of the IPO price range.
Recent IPOs have also performed well.
Shares of Myungin Pharm and Daehan Shipbuilding Co. are currently trading 15 to 24% above their IPO prices, while the share price of AI company Inno Tech Co. has quadrupled since its debut last week.
With sentiment improving and heavyweight names returning to the market, investment bankers expect the coming year to mark a turning point for Korea’s IPO landscape.
“Sleeping giants are waking up,” said a Seoul-based banker. “Next year could redefine the country’s IPO market.”
