W-Scope Chungju Plant, a South Korean lithium-ion batteries separator maker priced $310 IPO below guidance. Based on the news, it is due to the bad market conditions having to keep other deals on the sidelines. Actually, the float is the second-largest IPO in Korea, while the first one is LG Energy Solution. Both are also batteries industry makers raising W12.8trn in January. W-Scope Chungju Plant’s issue price covers W60.000 per share. This is actually 25% below the range for W100.000.
Based on the investors’ point of view the valuation is way too high for them. In addition, the offering size is trimmed from 9m to around 7.2m shares. Therefore, it could decrease the implied market capitalization from W3.4trn to W2trn. Those believing that this is too high comprises around 719 local institutions and forty international investors. All of them placed orders for a combined 179.7m shares. It reflects around 33 times the 5.4 shares on the offer for the institutional tranche. Around 90% of the institutional investors took the orders below range.
Furthermore, W-Scope Chungju Plant shares from the parent company slumped to 20.2% due to the disappointing IPO. This is especially for the South Korean unit. Later, it continued to drop a further 20.2%. W-Scope Chungju Plant after IPO is going to get 35.9% stake in WCP and subject to a 1.5-2.5-year-lock-up. Early this month, technology sectors like AI and smart computing IP companies like Openedged also priced IPO below range. The total comprised below W15.000-W18.000 to raise W34bn. The price comprises W10.000 per share. Thus it is 33.3% under the bottom of the range. Therefore, these situations led to other companies offering large IPO still unwilling to enter the market.