Six companies withdraw IPO applications amid stricter requirements

Six South Korean companies withdrew their preliminary IPO applications in October, citing stricter scrutiny by the Korea Exchange on both technical and financial requirements.

Some tech firms have raised concerns, arguing that these tightened regulations conflict with the government‘s efforts to promote advanced industries like artificial intelligence (AI).

According to the Korea Exchange on Monday, three companies – InnoTech, a manufacturer of specialized machinery, MakinaRocks, an AI-based industrial firm, and NWC, a 5G optical cable specialist, withdrew their applications for listing on the Kosdaq market on Friday.

MakinaRocks and NWC were aiming to enter the market through the tech-focused special listing system.

A total of six companies have pulled their applications so far this month. The three others are SIAS, One4U, and Livicon.

Typically, companies choose to voluntarily withdraw their applications after receiving a provisional rejection from the Korea Exchange.

The increasing number of withdrawals suggests that many companies are struggling to meet the stricter requirements for listing approval.

The heightened scrutiny follows the controversy over the inflated IPO valuation of tech firm FADU, leading to stricter standards, especially for companies seeking a listing through the technical exception route.

Even firms with proven technological capabilities are now facing greater scrutiny, as the Korea Exchange places more emphasis on business viability, carefully assessing revenue and order status.

Since June, the exchange operator has also streamlined the review process by separating evaluations for tech-special exception firms and regular companies, resulting in quicker notification of review outcomes.