LGES IPO draws near $100 bn retail bids, causes market selloff

[Photo by Han Joo-hyung]

Retail frenzy was as hot as the astronomical institutional craze over the LG Energy Solution IPO, with deposits for public subscription swelling to near $100 billion at the expense of falls in both Kospi and Kosdaq markets.

Up to 12.75 million shares or 30 percent of total 42.5 million initial shares were put up for public subscription until Wednesday. Its seven underwriters - securities firms KB, Daishin, Mirae Asset, Shinyoung, and HI, plus Shinhan and Hana financial investment companies – drew 32 trillion won ($27 billion) on the first day. Retail deposits vying for initial shares hit 114.1 trillion won ($96 billion) by the deadline on 4 p.m.

Half of the available shares are allotted on a pro-rata basis to distribute shares in proportion to subscription amount. The other half will be distributed equally among all investors who have made a minimum application of 10 shares in case subscription is less than or equal to the offered volume. When oversubscription happens, a computerized lucky draw will be made for share allotment.

If total retail subscription comes below 2.65 million, investors would be able to receive 2 to 3 shares under the equal distribution basis. Given near 4.2 million subscribers, nearly half may not get any.

After record-setting institutional bids coming to over 2,000 to one competition ratio, the IPO also raises the bar high in public subscription. The last biggest retail-hit IPO was SKIET that drew 81 trillion won worth retail deposits for initial shares.

The landmark IPO was easily priced at the top-end 300,000 won per piece to raise 12.75 trillion won for the world¡¯s No. 2 EV battery supplier out to more than double its capacity across the globe through the new proceeds. The book-building last week drew 15,203 trillion won from institutions at home and abroad.

The main Kospi has been losing nearly 4 percent and Kosdaq 5 percent since last Thursday as investors cashed out ahead of the arrival of the mega newcomer who could instantly make No. 2 on the Kospi if it debuts on Jan. 27 at doubled IPO price.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]