Shares of SK Bioscience, a South Korean producer of Covid-19 vaccines, more than doubled in their commercial debut after retail investors rushed to the local market’s largest initial public offering in four years.
The stock jumped 160% from its early morning IPO price in Seoul on Thursday after raising Won1.5tn ($ 1.3 billion). The jump pushed the group’s market value to around $ 11.5 billion.
Investor interest in fast-growing biotech companies is strong given the backdrop of the global coronavirus crisis. SK Bioscience, a unit of South Korean conglomerate SK Group, produces Covid-19 vaccines for AstraZeneca and has signed an agreement to jab for US-based Novavax. It is also developing its own Covid-19 vaccines and is conducting clinical trials in humans.
SK Bioscience’s IPO shares, priced at the high end of the marketed range, drew a record Won63.6 billion gross auction from retail investors.
SK Bioscience, established in 2018, is a unit of SK Chemical, which remains the company’s largest shareholder with a 68.4% stake.
The company recorded Won23bn in net profit between January and September of last year, compared to Won14.7bn for all of 2019. Sales fell to Won158.6bn from Won183.9bn.
SK Bioscience plans to use the proceeds of the IPO to develop new vaccines and expand its global contract manufacturing capacity.
Some fund managers have expressed concern about the high valuations of the South Korean biotech industry. “It’s a hot industry, so valuations are sure to be high. But the company actually generates sales with outsourced manufacturing, unlike some other biotech companies that are only relying on their potential for future growth, ”said Chan Lee, managing partner of Petra Capital Management, a company in the business sector. Seoul-based investment.
SK Bioscience’s IPO was the largest in South Korea since games company Netmarble floated Won2.7tn in 2017. Analysts said the country is heading for a record year for news sales. stocks with several large companies keen to tap strong retail demand and abundant market liquidity. South Korean companies, including Cocoa games and Blockbuster entertainment – the group behind K-pop superstars BTS – raised around 4.7 billion won through IPOs last year, according to the Korea Exchange, the stock operator.
Analysts predict that South Korea’s product IPO market could more than quadruple to reach Won20tn in 2021. The benchmark Kospi composite stock index has gained nearly 80 percent over the past year, trading near record highs as an export-led recovery in Korea South stimulates purchases by retail traders.
Earlier this month, Coupang, a South Korean e-commerce company backed by SoftBank raised $ 3.5 billion when it went public on Wall Street. Its market value initially exceeded $ 100 billion, but the stock price has since fallen more than 25% from its opening day high.
Some of those looking to go public include digital lender Kakao Bank, mobile content distributor KakaoPage, and Krafton, the game company behind global hit PlayerUnknown’s Battlegrounds. Fast-growing electric vehicle battery groups such as LG Energy Solution and SK ie Technology are also considering listings.
“Retail and institutional investors are likely to crowd into large IPOs scheduled for this year amid plentiful liquidity and low interest rates,” Lee said.