South Korea’s IPO market poised for record year on booming retail demand

South Korea’s IPO market poised for record year on booming retail demand
A man holds onto a bull during a ceremony marking the opening of the stock market at the Korea Exchange in Seoul on Jan. 4, 2021, on the first trading day of the new year. (AFP)
Short Url
Updated 08 January 2021

South Korea’s IPO market poised for record year on booming retail demand

South Korea’s IPO market poised for record year on booming retail demand
  • Its IPO market could raise up to $18.40 billion, a record and about four times above 2020 levels

SEOUL/HONG KONG: South Korea is set for the busiest year ever for new share sales as companies ranging from a digital bank, game developer to an electric car battery maker rush to take advantage of robust retail demand, bankers and analysts said.
Its IPO market could raise up to 20 trillion won ($18.40 billion), a record and about four times above 2020 levels, led by firms providing products that are more in demand from people stuck indoors due to the pandemic, analysts said.
Also, a move by the country’s financial regulator to increase the allocation of IPO shares to retail customers this year will drive up investment, they added.
The projection comes against a recent rally in the main KOSPI index to above 3,000 for the first time, with investors looking toward a broad recovery in exports beyond South Korea’s tech titans.
This is “shaping up to look like it could be a record year,” said David Chung, head of Korea investment banking at Goldman Sachs. “The majority of big mandates and IPO themes are around the technology sector.”
That includes companies that were offline but now, amid the health crisis, have built up a significant online presence, Chung added. “That is where the growth is.”
Deals in the pipeline include a potential 4.6 trillion won float from KakaoBank, which has benefited from an inflow of customers from South Korea’s dominant chat app operator Kakao Corp. Kakao has a 32 percent stake in KakaoBank.
KakaoBank has picked advisers but not decided when it will list, a spokesman said.
An estimated 9-trillion won share sale by Tesla supplier LG Chem’s electric car battery unit is also in the pipeline, according to an analyst.
The IPO size or timing has not been decided yet, an LG Energy Solution official said.
South Korean companies raised about 4.7 trillion won via initial public offerings in 2020, Korea Exchange data shows, surpassing the past two years, but behind an all-time high of about 10 trillion won reached in 2010.

MORE SHARE SALES
EV battery maker SK Innovation’s chemical material unit SK IE Technology (SKIET) is also expected to make its market debut this year, bankers and analysts said.
SKIET said it plans to complete the IPO process within 2021.
Consumer demand for EVs has been relatively resilient, aided by tighter environment regulations and the launch of new models.
In South Korea, a “New Deal” economic initiative that pivots on digital innovation and eco-friendly growth is burnishing the appeal of EV-related stocks.
Gaming company Krafton and SK Bioscience are also looking to raise about 5 trillion won and 600 billion won, respectively, this year, Seoul-based SK Securities said.
In October, Krafton picked advisers for its IPO with plans to go public in 2021. A company spokeswoman said on Friday there were no further details to share at the moment.
SK Bioscience was not immediately available for comment.
Individual investors, who piled into the South Korean market last year, are trading at a pace not seen in years.
In 2020, the KOSPI clocked its biggest rise since 2009 as shares in companies like Samsung Electronics, the world’s biggest maker of memory chips, surged.
“The market right now is clearly attractive to retail investors and it will likely attract more of them as IPO shares allocation for retail investors has gone up to as much as 30 percent from 20 percent,” said Lee So-joong, an analyst with SK Securities.


Canadian firm pulls out of Carrefour takeover after France insists ‘No’

Canadian firm pulls out of Carrefour takeover after France insists ‘No’
Updated 32 min 8 sec ago

Canadian firm pulls out of Carrefour takeover after France insists ‘No’

Canadian firm pulls out of Carrefour takeover after France insists ‘No’
  • Carrefour has more than 12,300 stores in more than 30 countries and employs 320,000 people worldwide
  • Canada's Couche-Tard has offered to take over the French supermarket giant for 16 billion euro ($19.5 billion)

PARIS: Canadian convenience store chain Couche-Tard has reportedly pulled out of a multi-billion euro takeover of supermarket giant Carrefour after the French government said it would veto the deal.
Negotiations over the 16 billion euro ($19.5 billion) deal ended after a meeting between the French Minister of the Economy Bruno Le Maire and the founder of Couche-Tard Alain Bouchard, Bloomberg news agency said, citing sources.
French ministers had insisted Friday they would not agree to the takeover because it could jeopardize food security, an even more important consideration given the coronavirus pandemic.
In an attempt to reassure ministers, Bouchard had promised to invest billions in Carrefour, said he would maintain employment for two years and that the group would be listed on the Paris Stock Exchange in parallel with Canada, Bloomberg reported.
Contacted by AFP, neither Couche-Tard nor Carrefour had confirmed the information on Friday evening.
Although talks had stopped, anonymous sources cited by Bloomberg said negotiations could resume if the French government changes its position.
But on Friday, France’s Economy Minister made his choice public, telling BMTV and RMC: “My position is a polite, but clear and definitive ‘No’.”
“Food security is a strategic consideration for our country and one does not just hand over one of the large French distributors like that,” Le Maire said.
“Carrefour is the biggest private sector employer in France with nearly 100,000 employees,” he noted, and the group accounts for 20 percent of the food distribution market in the country.
The French statements have not convinced the Canadian government.
A Canadian federal source said while they could understand concerns over allowing a foreign firm to take over such a large national employer, concerns over food security were unsubstantiated.
“But we cannot accuse a leading Canadian company like Couche-Tard of endangering the food sovereignty of an entire country,” the source, who requested anonymity, told AFP.

'Food sovereignty'
On Wednesday, Couche-Tard submitted a non-binding offer for Carrefour, valuing the group at more than 16 billion euros ($19.5 billion).
Le Maire made clear immediately that he was not in favor of a deal involving “an essential link in food security for the French, of food sovereignty.”
The government’s reaction had caused “surprise” at Carrefour itself, according to sources who said the comments were “premature” given that merger discussions had barely begun.
“We haven’t decided yet whether the interest shown is attractive for us,” one company official said on condition of anonymity earlier in the week.
Carrefour has more than 12,300 stores of various formats in more than 30 countries and in 2019 generated a net profit of 1.3 billion euros ($1.5 billion) on revenue of 80.7 billion euros ($97.4 billion).
It employs 320,000 people worldwide.
Couche-Tard has a worldwide network of more than 14,200 stores and earned a net profit of $2.4 billion on sales of $54 billion in its last complete year.
In the United States and several European countries, as well as in Latin America and southeast Asia, it operates under Circle K and other brands.