이 기사는 2021년 10월 01일 08:04 thebell 에 표출된 기사입니다.

K Car, a South Korean used car retailer owned by private equity firm Hahn & Co, has decided to slash its initial public offering price and go ahead with a listing after receiving weaker-than-expected interest from institutional investors.

A total of 296,192,968 shares have been subscribed by institutional investors during the book-building process, the company said on Wednesday. The number of bids represents a 40 times oversubscription, which is relatively disappointing compared to prior deals in the country’s IPO market this year that were oversubscribed by hundreds or thousands times.

Many of the orders were placed at the lower end of the company’s price range of 34,300 won ($29.05) to 43,200 won per share, with 38.8% of the total placed at even lower prices than 34,300 won per share.

Hahn & Co, which owns K Car, has accordingly decided to cut the company’s IPO price to 25,000 won per share, 27% lower than the bottom of the initial price range, to reflect the market’s cautious view, and press ahead with a listing as scheduled.

The number of shares offered by existing shareholders has also been reduced by 21% to 12,262,067 shares, while the number of new shares to be issued will remain the same as 1,202,164 shares. As a result, the size of the deal has been decreased from between 577 billion won and 727 billion won to 336.6 billion won.

Institutional investors that placed orders at lower prices were mostly domestic. This is in stark contrast to foreign institutional investors, with more than 90% of their bids placed at the upper end of the initial price range.

This mixed result appears to be attributable to domestic institutions having little experience in investing in the used car sector, market watchers said. In contrast, many of the foreign institutional investors that participated in the IPO are said to have invested in Carvana, the largest used car retailer in the US.

The Arizona-based used car company went public on the New York Stock Exchange in April 2017. Its stock price has risen more than 27 times in the past four years to around $305 apiece. K Car, which is the largest used car retailer in South Korea, attracted interest from foreign institutional investors looking for the next Carvana.

Unfavorable market conditions due to fears of the fallout from Evergrande's potential collapse and the US Federal Reserve’s hawkish stance also chilled investor sentiment. The country’s benchmark Kospi retreated below 3,100 in September from around 3,300 in August.

“K Car is the first used car retailer in the country to go public, and this could be a reason that domestic institutional investors have taken a cautious approach,” a source from the investment banking industry said. “But there is no doubt that the company has a strong fundamental, so its stock price could climb after the IPO.”

“We will maintain our strong position in the market and continue to focus on our existing business plans,” a K Car official said. “We believe the company’s performance and growth potential will be reflected in the stock price over time.” (Reporting by Kyung-ju Lee)