South Korea's new rules will allow institutional participants to secure advance initial public offering allocations if they meet strict qualification standards. Participating institutions must possess assets or equity capital valued at 20 times their subscribed shares and comply with a tiered lockup schedule extending up to 10 months. The reforms also permit underwriters to gauge institutional interest under non-disclosure agreements before a company files its registration statement.
Key points
Regulators designed the framework to counter severe post-IPO selloffs following an averag…: Regulators designed the framework to counter severe post-IPO selloffs following an average 32% plunge among companies listing in 2026.
Underwriters gain the authority to assess institutional demand under non-disclosure agree…: Underwriters gain the authority to assess institutional demand under non-disclosure agreements before establishing an initial price range.
The regulatory overhaul arrives amid heightened scrutiny over duplicate listings by paren…: The regulatory overhaul arrives amid heightened scrutiny over duplicate listings by parent firms that derailed deals like the Solidigm offering.
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South Korea’s top financial regulator will introduce a system for cornerstone investors in initial public offerings to curb sharp price drops after listings.
The Financial Services Commission said institutions that commit to lockups of at least six months will be allowed share allocation in advance under the new system, which got government approval Tuesday. The rules take effect Nov. 13 alongside amendments to the capital markets law.
“Lining up stable, longer-term institutional buyers before a deal is priced should bolster investor confidence in IPOs and ease the so-called ‘IPO price’ problem, in which shares tumble as holders rush to sell right after listing,” the FSC said in a statement on Tuesday.
Korea’s notoriously volatile stock market has ensnared some of the country’s biggest recent debuts, at times with wide-ranging implications. For example, the 32% plunge of data center infrastructure company Elice Inc.’s shares on their first day became a signal for the global neocloud business. IPOs in Korea have largely disappointed investors this year, with the shares of companies that listed in 2026 down a weighted-average 32%, far behind the…
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