K Car scales back IPO price and share offering amid market uncertainty

South Korea's largest used car seller K Car Co. priced its initial public offering at 25,000 won ($21.1) apiece, about 30 percent below the bottom end of its indicative price range upon receiving mixed responses from institutional investors during a book-building session.

According to the company's filing on Wednesday, K Car's IPO price was determined at 25,000 won a piece after a two-day book-building session that ended on Tuesday. Considering K Car’s original desired price range set at between 34,300 won and 43,200, the final IPO price is 27 percent lower than the bottom of the guidance. Based on the final price, K Car would raise 336.6 billion won from its IPO, more than halved from 727.1 billion won it had originally aimed for.

K car said it has opted for a lower pricing to better appeal its initial shares upon meeting with mixed responses from institutions during the book-building session held from Monday to Tuesday.

Most of the global institutions including Cavana and Vroom, which have raised handsome profits by investing in global used car online platforms, showed solid demand, applying for the upper end of the offer price range. Local institutions, on the other hand, showed less enthusiastic response amid sluggish performance of recent blockbuster IPOs in Korea in which they had taken part.

K Car also reduced the number of shares offered for sale from existing shareholders by 20 percent, or about 3 million shares, placing them under a lock-up period of one year. As a result, the company will offer total 13,464,231 shares for IPO versus the initial offering of 16,830,288 shares.

At the final IPO price, the market capitalization of K Car would reach 1.2 trillion won, deemed conservative evaluation when considering the company’s high growth rate shown in recent years. K Car, as the country’s No. 1 used car seller, finished the first six months of this year with record earnings – an operating profit of 38.5 billion won on sales of 910.6 billion won. Its operating income and sales for this year are forecast to surge 98.9 percent and 36 percent, respectively, projected its bookrunner NH Investment & Securities.

Public subscription that kicked off on Thursday will run until Oct. 1. Its listing is scheduled on Oct. 11. NH Investment & Securities, Daishin Securities, Samsung Securities and Hana Financial Investment are joint bookrunners.

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