IPO Application
Overview
IPO application (Initial Public Offering application) refers to a series of procedures in which an unlisted company requests a preliminary listing review from the exchange, submits a securities registration statement to the financial authorities, and then publicly offers new shares to general investors in order to list on the securities market. In a narrow sense, it refers to a company's listing and public offering process; in a broad sense, it also includes the act by which investors express their intention to subscribe through a securities firm account in order to participate in the subscription for public offering shares. For companies, an IPO application serves as an opportunity to raise funds and secure governance transparency, while for investors it provides a chance to be allotted shares of newly listed companies.
Key Details
1. IPO Application Procedures from the Company's Perspective
An IPO application generally proceeds in the following order: ① selection of a listing underwriter (lead underwriter), ② accounting audit and internal control improvement, ③ request for preliminary listing review by the exchange, ④ submission of a securities registration statement to the Financial Services Commission, ⑤ demand forecasting (bookbuilding) targeting institutional investors, ⑥ finalization of the offering price and general subscription, ⑦ allotment and payment, and ⑧ new listing and commencement of trading. Preliminary review is handled by the KOSPI Market Division for KOSPI and the KOSDAQ Market Division for KOSDAQ and KONEX; the review period takes an average of 45 business days (about 45 days for KOSDAQ and around 45 days for KOSPI). After submission of the securities registration statement, it becomes effective after a 15-day correction period, during which the Financial Supervisory Service conducts a review in parallel.
2. Listing Requirements and Review Standards
KOSPI requires quantitative requirements such as equity capital of at least KRW 30 billion and revenue of at least KRW 100 billion (three-year average), while KOSDAQ has multiple tracks, including equity capital of at least KRW 3 billion and market capitalization of at least KRW 9 billion. In recent years, even companies that do not meet quantitative requirements have been able to list through expanded technology special listing, profit-unrealized company special exception, and business model special exception tracks that recognize technology and growth potential, leading to a significant increase in IPO applications by bio, secondary battery, and AI companies. The review also considers qualitative requirements such as the largest shareholder's stake, history of embezzlement or breach of trust, unfaithful disclosure, and management transparency, as well as financial soundness.
3. Determination of Offering Price and Demand Forecasting
The core of an IPO application is calculating the offering price. The underwriter presents an indicative offering price band using the price-earnings ratio (PER), price-to-book ratio (PBR), EV/EBITDA, etc. of comparable companies, and institutional investors submit prices and quantities during the demand forecasting period. The higher the lock-up commitment ratio, the more likely a price at or above the upper limit is determined; if demand forecasting results are weak, the offering may be withdrawn or the price may be lowered below the lower limit of the band. Afterwards, general investors apply for at least the minimum subscription unit (10 shares) through securities firm apps on the subscription date, and under the equal allocation method introduced in 2021, even applicants who submit only the minimum subscription quantity can be allocated a certain amount by lottery.
4. Subscription Application from the Investor's Perspective
Investors must open an account with a securities firm that can accept subscriptions for the relevant stock by the day before the subscription date, and pay subscription margin equal to 50% of the offering price. The allotment result is notified within 2–3 business days after the subscription closes, and excess subscription amounts are refunded. On the first day of listing, price volatility can be large depending on the available float (shares released from lock-up), so it is important to check the company's business model, financial statements, and the investment risk factors in the securities registration statement in advance. Recently, non-face-to-face subscription through MTS has become common, and access tends to spike on the first and last days of subscription.
5. Costs and Obligations
In the IPO application process, costs include underwriter fees (1–3% of the offering amount), accounting audit and legal advisory costs, and exchange preliminary review fees (around KRW 3 million for KOSPI and KRW 1.5 million for KOSDAQ). After listing, the company must comply with governance requirements such as mandatory lock-up for the largest shareholder and related parties (6 months to 3 years), disclosure obligations for quarterly, semiannual, and annual business reports, and the appointment of outside directors and an audit committee.
Recent Trends
The IPO market in 2024–2025 showed a recovery, helped by expectations of interest rate cuts and the implementation of the Value-up Program. In the second half of 2024, listings by secondary battery, bio, and AI software companies continued, and in 2025, review standards for the technology special listing track were strengthened, making objectivity in technology evaluation and proof of commercialization potential more important. The financial authorities reorganized the eligibility requirements for institutional investors' participation in demand forecasting and pursued institutional improvements to prevent sham subscriptions and intentional low-price offerings. Discussions also continued on the proportion of equal allocation for general subscribers and the minimum subscription unit, and measures to manage float to curb sharp price swings immediately after listing are also being discussed. Investors tend to use the history of correction requests in securities registration statements, the demand forecasting competition ratio, and the lock-up commitment ratio as key indicators.
Related Topics
- [[기업공개]] (Initial Public Offering)
- [[코스닥]] (KOSDAQ)
- [[공모주 청약]] (Public Offering Share Subscription)
- [[증권신고서]] (Securities Registration Statement)
- [[상장예비심사]] (Preliminary Listing Review)
- [[밸류업 프로그램]] (Value-up Program)