South Korea’s IPO bust clouds equity markets as Chaebol structure restrains listings
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- South Korea recorded only 15 new listings worth roughly $700 million in the year to June 3, compared with an average of 80 new listings and $8 billion in proceeds per year between 2020 and 2025, according to LSEG data, while Malaysia's new listings and proceeds nearly doubled South Korea's.
- South Korea's five largest chaebols — Samsung, SK, Hyundai Motor, LG, and HD Hyundai — account for about 70% of the country's equity market cap, and Polka Mishra of Javelin Wealth Management said the family-run conglomerates are now 'more of a hindrance than a help for creating new, independently listed champions.'
- Cross-held shares between listed parent companies and their subsidiaries made up roughly 11% of South Korea's total market cap last year, compared with about 4% in Japan and 3% in Taiwan, according to the Financial Services Commission.
- Korea Exchange CEO Jeong Eun-bo told CNBC on June 11 that parent-subsidiary listings 'will be prohibited as a general principle,' saying they dilute parent company value at the expense of minority shareholders while letting controlling families retain control of the newly listed subsidiary.
- South Korea's 50% inheritance tax on amounts exceeding 3 billion won (about $2 million) gives conglomerates an incentive to keep valuations and free float low, Mishra said, reinforcing the structural drag on new listings.
- Korea Exchange plans to delist around 300 companies by next year to redirect capital to new issuers, and analysts at EY and Shinhan Securities expect AI infrastructure firms — particularly in the chip sector led by Samsung Electronics and SK Hynix — to dominate the IPO pipeline, with the state-led National Growth Fund having invested roughly $130 million each in AI chip startups Rebellions and FuriosaAI.
- The Kospi is the top-performing major index worldwide, more than doubling in value in the year to Monday, even as IPO activity cratered — a divergence Korea Capital Market Institute's Lee Hyo-seob called 'double-edged' for the broader capital market.
Why it matters: South Korea is trying to close the 'Korea discount' by blocking parent-subsidiary listings and delisting roughly 300 companies by next year, but its 50% inheritance tax and 70% concentration in five chaebols continue to suppress new listings — meaning the $8 billion-per-year IPO pipeline investors took for granted between 2020-2025 may not return until governance rules and tax incentives are recalibrated for the AI-chip era.
