Investors grow more cautious in IPO market amid weak sentiment

[Photo by MK DB]

Small companies preparing for initial public offerings in South Korea this year are struggling to gain investor interest in a market where big names like Kurly Inc. and Hyundai Samho Heavy Industries Co. have withdrawn their plans due to weak market sentiment.

According to sources on Thursday, a total of eight companies are on path to go public on the Kosdaq this month. The first two on the list are Hanjoo Light Metal Co. and TEMC Co., both to be listed on Jan. 19. Public subscriptions for the two companies closed Wednesday with tepid competition. The competition ratio for Hanjoo Light Metal, an aluminum parts solution company, was 565.18 to 1, whereas the figure for TEMC, a developer of special gases used in semiconductor manufacturing, was 0.8 to 1.

TEMC plans to push for its IPO despite the poor subscription results. TEMC had to lower its desired IPO price to 28,000 won ($22.5) from the original low end of 32,000 won.

Weak results are also expected for upcoming IPO companies like semiconductor distributor Mirai Semiconductors Co., and Obzen Inc., a marketing solution provider. The two completed book building for institutional investors on Wednesday.

Investors are taking a cautious approach for IPOs and they will exercise more prudence this year, said Park Jong-sun, an analyst at Eugene Investment.