As more than a month has passed since guidelines took effect that in principle ban duplicate listings while allowing exceptions, some listing reviews that had been stalled for a long time are moving again and IPO supply in September is expected to increase. Still, sentiment for IPO investing remains weak, with most newly listed firms in August trading below their offer prices.

The Financial Services Commission and the Korea Exchange have enforced duplicate listing guidelines and revised listing and disclosure rules since Aug. 3. The rules apply when a listed company seeks to list an unlisted subsidiary it effectively controls or that is in a vertical control relationship, on domestic or overseas exchanges.

The new standards impose five obligations on the parent company's board: a shareholder impact assessment, measures to protect shareholders, confirmation of shareholder intent, a board vote for or against, and disclosure. The subsidiary must be recognized as operationally and managerially independent from the parent.

For subsidiaries created through a spin-off, shareholder consent at the parent company is mandatory. A so-called 3 percent rule also applies, limiting voting rights to 3 percent for shareholders holding more than 3 percent, including the largest shareholder and related parties.

As the outline of regulation became clearer, some reviews of duplicate-listing candidates that had been delayed for a long time have resumed. Duksan Neprocs, a subsidiary of Duksan Hi-Metal, and DTS, a subsidiary of Dasan Networks, proactively reflected the draft guidelines and passed preliminary KOSDAQ listing reviews on July 20.

IPO supply fell sharply in the first half. According to IR consulting firm IRQders (IR-Qders), 17 companies made new listings in the first half, down 55.3 percent from 38 a year earlier. The size of offerings also fell 48.7 percent to 1.13 trillion won from 2.21 trillion won.

Offering procedures increased again in the second half, but results were weak. According to Samsung Securities, 6 regular companies excluding SPACs listed in August, raising 210.6 billion won.

Subscription competition ratios by institutions and retail investors for August listings were far below the average through the end of July. In some cases, offer prices were set at the bottom of the indicated range. Rates of institutions applying for lock-up commitments and allocation rates also fell. Despite ample stock market liquidity, weakening appetite for IPOs has led to more selective investment by stock, the analysis said.

Post-listing performance was also weak. As of the Sept. 3 close, 5 of the 6 regular companies newly listed on the KOSDAQ in August traded below their offer prices, excluding Ingenia Therapeutics. Cases continued in which shares fell below offer prices after listing despite high retail subscription competition and large deposits.

Skylabs, the first company to list in September, also struggled at the bookbuilding stage. It fixed its offer price at 10,000 won, below the indicated range of 13,000 to 16,000 won. The institutional bookbuilding competition ratio was 63.41 to 1 and the retail subscription competition ratio was 2.85 to 1.

But it showed a reversal after listing on the KOSDAQ on Sept. 4. Skylabs began trading at 8,500 won, 15 percent below its offer price, but ended at 23,500 won, up 135 percent from the offer price. As weak bookbuilding and retail subscriptions do not uniformly lead to post-listing share weakness, differentiation by stock is also widening.

Among duplicate-listing candidates, Duksan Neprocs is the first test case. Its parent, Duksan Hi-Metal, previously received shareholder approval at a general meeting for the subsidiary's listing and also prepared a plan for an in-kind dividend of subsidiary shares. The outcome of Duksan Neprocs' offering could also affect the decisions of other duplicate-listing candidates.

HD Hyundai Robotics is a representative case. The company was established in 2020 through a spin-off of HD Hyundai's robotics business division, and HD Hyundai holds an 81.82 percent stake.

To pursue an IPO under the guidelines, it must obtain consent at an HD Hyundai shareholders meeting with the 3 percent rule applied. The underwriter group is reviewing steps to resume the listing, but it still needs to prepare shareholder protection measures and carry out procedures to persuade shareholders before filing for a preliminary review.

Younghoon Kang (강영훈), an analyst at Samsung Securities, said he expects investor interest in IPOs to expand as improvements to offering-related systems such as pre-bookbuilding and the introduction of a cornerstone investor scheme proceed, and as unicorn companies planning listings by the end of this year or early next year, including Musinsa, MegazoneCloud and Rebellions, gradually come into clearer view.

Cheolhwan Yoon (윤철환), an analyst at Korea Investment & Securities, said recovery in IPO market sentiment is slow due to stock market instability. He added that he expects room for a more favorable environment within the KOSDAQ market as policies such as the KOSDAQ promotion and demotion system are specified and sales of the second National Growth Fund begin, and he maintained a positive stance on the IPO market in the second half.