"The IPO rally that blew in through early this year has vanished."
Analysts attribute the chill that has swept Korea's initial public offering (IPO) market this year to the growing pains of government policy. While the government has blocked listings of large corporate subsidiaries and sought to attract blue-chip companies to engineer an upward trajectory for stock prices, innovative firms in desperate need of funding are being excluded, they say. As exit channels for financial investors (FIs) narrow in tandem, concerns are mounting that a vicious cycle could spread across the entire investment-and-recovery cycle within the capital market.
According to the investment banking (IB) industry on Monday, 21 companies listed through May this year, raising approximately 1.0474 trillion won. For the first time since 2013 (91 companies, 1.3096 trillion won) — widely cited as a dark age for IPOs — annual listing volume and offering size are each expected to fall short of 100 companies and 3 trillion won, respectively. Only one company, K Bank, made it onto the KOSPI this year, and the chances of a large player emerging to change the market landscape in the second half are seen as low.
The fundamental cause is that dual-listing regulations were implemented at a far higher intensity than the industry had originally anticipated, fundamentally blocking IPOs of large corporate affiliates such as HD Hyundai Robotics and Hanwha Energy. Over the past five years (2022–2026), large corporate affiliates listed on the KOSPI accounted for more than 20% of total offering size each year. Now, unless they obtain strong consent from parent company shareholders comparable to a "majority of minority" (MoM) vote, they cannot even clear the exchange's screening threshold.
The "dasandasa" (many born, many die) policy, presented with the goal of improving the constitution of the capital market, is also assessed as having directly led to a decline in the number of KOSDAQ-listed companies. The government's design is to swiftly expel troubled companies and fill the resulting void with high-quality, strong small and mid-sized firms, preventing the market from plunging. In fact, the number of companies that listed on the KOSDAQ in January through May this year (13 companies, excluding SPACs) was the smallest in the past five years (2021–2025), yet eight of them still trade above their offering prices. This reflects the effect of setting offering prices low from the outset to drive subscription demand. Amid this, many innovative companies have failed to clear the now-tougher screening threshold.
The artificial intelligence (AI) unicorns that the exchange had been eager to attract for KOSDAQ listings appear to be shoring up their fundamentals or weighing overseas listings for the time being. Rebellions, which was recently valued at as much as 3.4 trillion won in a pre-IPO funding round, had pursued a listing within the year but postponed it to next year for internal restructuring. In the case of FuriosaAI, despite receiving 800 billion won in funding from the National Growth Fund, it still cannot abandon the option of a U.S. listing after Cerebras — its key peer group (comparison company) — successfully completed its Nasdaq debut.
For the KOSPI as well, K Bank, which listed in February this year, is expected to be both the first and the last. Musinsa and Goodai Global, which had drawn attention with valuations exceeding 10 trillion won, are not in a situation where they must complete a listing this year — either due to FI pressure or urgent funding needs. They are reportedly planning to wait until they have seen their full-year earnings this year before launching listings in earnest around next year, in order to secure their desired valuations. Galaxy Corporation, another unicorn whose listing within the year had been anticipated, also faces difficulty listing this year following the exchange's feedback to expand artist intellectual property (IP).
The slump in the IPO market creates the problem of severing the virtuous cycle of investment and recovery by blocking companies' funding channels. In particular, cases are emerging one after another in which firms with technological capability and growth potential are barred from listing due to unstable financial structures. On the ground, complaints arise that it is extremely difficult to pass even the technology evaluation stage at the very start of technology special-listing, because companies must prove the profitability of their business models. "To pass the technology evaluation, a company must receive at least an 'A' and a 'BBB' from two specialized evaluation agencies designated by the exchange, but it has recently become very difficult to receive an A," an IB industry official said. "We put the pass rate at around 30%, which would likely be the lowest figure ever."
Experts pointed out that the primary market must be maintained above a certain level for the virtuous cycle of funds within the capital market to be sustained. If companies that desperately need funding are excluded from IPO opportunities, FIs that invested with post-listing exits in mind will inevitably face difficulties. "In the past, when the number of IPOs declined, authorities would diagnose what the problem was, whereas these days they focus more on how stock prices move after listing rather than on quantity," another IB industry official said. "Since the fundamental purpose of listing is to raise capital, we need to take the sharp drop in new listings this year seriously."
As a result, the securities industry's forecast that the IPO market would enter a supercycle this year is assessed as having effectively lost steam. From the point late last year when the stock market was buoyant, inquiries about listing underwriting surged, and each brokerage saw this year as the start of an upcycle period. "The IPO market typically has a cyclical character in which booms and busts repeat over a four-to-five-year cycle," an IB industry official explained.
