Preliminary Listing Reviews Accelerate, but IPO Market Remains in a 'Drought'

Preliminary Review Period Drops from 121 to 91 Days
IPO Listings Plunge from 149 to Just 36
Factors Include Dual Listing Ban, Market Imbalances, and Stricter Reviews

Although the preliminary review process—typically the first step for unlisted companies aiming to go public—has become significantly shorter, the size of initial public offerings (IPO) this year has dropped markedly. This downturn is attributed to three independent factors: the prohibition of dual listings, stricter screening thresholds, and underwhelming public offering returns. As a result, there are growing calls for more market-friendly regulatory easing to prevent a contraction of the entire venture investment ecosystem.

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Shortened Preliminary Reviews as Time to Withdrawal Speeds Up

According to the Korea Exchange (KRX) corporate disclosure channel KIND as of July 29, the average period from submission of a preliminary IPO application to a final outcome (approval, rejection, or withdrawal) has reduced by about 30 days, from 121.2 days in 2023 to 91.4 days this year.

This acceleration is due to companies making faster decisions to withdraw their applications. The time taken from initial submission to withdrawal was 176.2 days in 2023, 119.0 days in 2024, 98.0 days last year, and 99.7 days this year—revealing a clear trend towards shorter wait times overall.

Withdrawal from review is a mechanism that allows companies to proactively pull their application when disapproval by the KRX Listing Review Committee appears likely. This is often used so that companies can address pointed issues and reapply at a later date. The fact that withdrawals are occurring more swiftly indicates that companies are opting for swift decisions over meaningless waiting, allowing them to refocus on business improvements or new strategies.

"IPOs Halved... Regulatory Easing Needed"

While preliminary reviews now proceed faster, the IPO threshold itself has nevertheless become even higher. The number of KOSPI and KOSDAQ listings exceeded 100 annually with 149 cases in 2023, 142 in 2024, and 115 last year. However, this year the count stands at only 36 to date. Even considering potential listings throughout the rest of the year, projections indicate that the total will remain at about half of last year's level.

KOSPI IPOs have stagnated dramatically, mainly driven by a strong stance against dual listings. Only one company debuted on KOSPI in the first half of this year, down from four during the same period last year. Key companies such as Essex Solutionz, a subsidiary of LS Group, and Netmarble Neo, a subsidiary of Netmarble, halted their IPO procedures due to issues related to dual listing.

Similarly, KOSDAQ listings have dwindled amid a heavy concentration of investor demand for large-cap semiconductor stocks. According to a Shin Young Securities analysis, as of June 30 this year, the average return for newly listed KOSDAQ companies compared to their IPO offering price was just -14.1%.

IPO screening has also become more stringent. An official in the venture capital (VC) sector commented, "The KRX now even demands rigorous revenue indicators for companies applying for technology-specialized listings, reflecting how much harder it has become to pass reviews." He added, "Excessive IPO regulations disrupt the healthy cycle of capital recovery in the venture ecosystem, so it's necessary to adapt regulations to real-world conditions."

Given these trends, forecasts indicate that the total number of annual IPOs this year will be limited to only 64 to 69 companies. Shin Young Securities analyst Oh Kwangyoung commented, "Even if numerous approvals come in the second half, the sluggish performance in the first half means that the number of companies entering the IPO market this year will be markedly lower than in previous years."

This content was produced with the assistance of AI translation services.