Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Over 50 companies await Kosdaq listing review
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By Anna J. Park
Preliminary evaluations by the Korea Exchange (KRX), the country's bourse operator, on companies that filed for Kosdaq listing, are surpassing the usual timeline by several months. This delay is attributed to the heightened demand for Kosdaq initial public offerings (IPOs).
According to the KRX, over 50 companies are currently awaiting the outcomes of preliminary reviews for potential listing on the technology-centric Kosdaq market. These companies have already submitted their applications for consideration.
This stands in stark contrast to the benchmark KOSPI market, where all companies that underwent the preliminary review have received their results, with only two exceptions—HD Hyundai Marine Solution and PLANTEC—still awaiting the outcome.
The average length of time required for the review process by the KRX has also soared when it comes to the Kosdaq market. While most companies that filed their KOSPI IPO applications saw their preliminary assessment results within two months, evaluation reviews for the secondary Kosdaq market are now taking at least four to six months.
Considering additional processes, such as correction requests on a company's prospectus by the Financial Supervisory Service (FSS) and other factors, the mandatory listing procedure for a prospective company aiming for a Kosdaq IPO is expected to extend beyond six months.
The key reason behind the tie-up in the review schedule is the drastic rise in the number of mid-sized companies that wish to go public on the Kosdaq since the third quarter last year.
A total of 132 companies went public on the Kosdaq market in 2023, up a whopping 50 percent compared the average 88 companies a year from 2011 to 2022. Aiming to ride on the overheated atmosphere of the IPO market, many small and medium-sized companies have applied for Kosdaq listings or SPAC mergers during the second half of last year to raise funds.
The IPO market in the country appears to be somewhat frenzied, particularly following the successful listing of EcoPro Materials in November. Despite facing lower-than-expected demand during its bookbuilding process, the secondary battery company managed to achieve nearly a 60 percent increase from its initial price on the first day of listing. The stock's continued surge was attributed to the government's sudden and comprehensive ban on short selling in the same month.
The formation of such a favorable atmosphere for the listing of small and medium-sized companies led to the backlog at the Kosdaq-listing review departments at the KRX. That means around 30 personnel at the departments are handling IPO applications for the Kosdaq market. A KRX official explained that "diversification and specialization in the business models of companies have somewhat slowed down the review process."
Additionally, the IPO fiasco involving Fadu late last year, pertaining to the fabless semiconductor company's problematic listing process with a fraudulent prospectus, has led financial authorities to adopt a more stringent approach to scrutinizing earnings estimates submitted by companies.