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.
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 Kospi’s gain of 38%. Under the new system, half of an investor’s allocation would be locked up for six months, 30% for eight months and the remaining 20% for 10 months. Pre-allocations would be capped at 20% of the institutional tranche on the Kospi, with no single investor taking more than 10%.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing