Foreign investors classified as overseas institutions received preferential stock allocations in South Korean IPOs without mandatory lock-up commitments, while domestic institutional investors faced stricter holding requirements. In the HLGenomics IPO scheduled for listing on the 24th on KOSDAQ, foreign institutions received 230,850 shares with zero lock-up agreements, according to the Financial Supervisory Service. Domestic investors recorded lock-up ratios of 36.14% for asset managers, 4.50% for pension funds and insurance companies, and 56.53% for other categories. The allocation disparity stems from foreign investors' higher brokerage fee contributions through securities trading. South Korean financial authorities identified cases where domestic fund money operates through offshore structures to gain foreign investor classification and avoid domestic lock-up regulations.
HLGenomics Allocates 230,850 Shares to Foreign Institutions Without Lock-Up Requirements
HLGenomics allocated 230,850 shares to foreign institutional investors with zero lock-up commitments in its IPO scheduled for KOSDAQ listing on the 24th. Foreign investors submitted demand survey applications without lock-up agreements from the initial stage. KB Securities served as lead underwriter and IBK Investment Securities as co-underwriter for the HLGenomics IPO.
Domestic institutional investors received allocations under mandatory lock-up requirements monitored by financial authorities. Investment banking industry sources stated domestic asset managers face practical difficulties in receiving allocations without lock-up commitments due to regulatory oversight.
A prime brokerage service industry official stated that verification methods do not exist to confirm whether securities firms provided preferential allocations to overseas institutions without lock-up commitments, indicating the need for clear standards.
ABP Asset Management Operates Offshore Fund Structure With 16.9 Billion Won in Assets
ABP Asset Management operates 'ABP Global IPO Private Investment Trust No. 1' in South Korea. The fund was established on February 11. ABP Asset Management's fund holds an offshore fund-of-funds operated by Fibonacci Asset Management. The offshore fund-of-funds structure provides diversified investment across stocks, bonds, and futures with higher fee structures due to complexity. The fund reached 16.9 billion won in assets within five months of launch.
Industry observers noted that offshore funds-of-funds contribute to securities firms' fee revenue growth through domestic stock and futures trading while securing advantageous positions in public offering subscriptions. These funds generate brokerage fee revenue through simultaneous buy and sell transactions without financial losses. Repeated transactions increase the funds' brokerage fee contribution rates, resulting in preferential treatment in IPO allocations.
Offshore funds-of-funds classified as foreign investors operate under more flexible lock-up agreement terms compared to domestic institutional investors. These allocations can be sold immediately on listing day if stock prices rise, creating overhang concerns for general shareholders and investors participating in IPOs with mandatory lock-up commitments.
An equity capital markets industry official stated that efforts to filter indirect offshore allocations face limitations in verifying all cases, and allocation standards for foreign investors vary across securities firms without definitive answers.
Financial Authorities Expand Mandatory Lock-Up Ratios for Domestic Institutional Investors
Financial authorities are pursuing institutional improvements to expand mandatory lock-up commitments for domestic institutional investors. Mandatory lock-up allocation ratios in the previous year reached 54.9% for KOSPI and 39.6% for KOSDAQ, representing increases of 13.6 percentage points and 23.8 percentage points respectively compared to the prior year.
FAQ
What allocation did foreign investors receive in the HLGenomics IPO?
Foreign institutional investors received 230,850 shares in the HLGenomics IPO scheduled for KOSDAQ listing on the 24th, with zero mandatory lock-up commitments.
How does ABP Asset Management's offshore fund structure operate?
ABP Asset Management operates 'ABP Global IPO Private Investment Trust No. 1' established on February 11, which holds an offshore fund-of-funds operated by Fibonacci Asset Management. The fund reached 16.9 billion won in assets within five months of launch.
