StradVision, an autonomous-driving artificial intelligence (AI) company, saw forfeited shares emerge during its KOSDAQ initial public offering (IPO), which lead underwriter KB Securities took on instead. KB Securities has also acquired offering shares due to a failure to meet mandatory lock-up regulations, meaning tens of billions of won in funds will be tied up for some time.
According to the investment banking (IB) industry Monday, StradVision saw forfeited shares emerge during its public subscription process on June 24. One institution failed to pay for the 63,408 shares it had committed to subscribe, leaving lead underwriter KB Securities to acquire the entire amount. Based on the confirmed offering price of 12,000 won, the forfeited shares amount to approximately 760.9 million won.
It is uncommon for forfeited shares to emerge even when ample demand has already been secured. StradVision allocated 5.25 million shares to institutions and 1.75 million shares to retail investors, with the demand forecast and general subscription competition ratios recording 381-to-1 and 46-to-1, respectively. It is the first such case this year. As of last year, the only instance was when one institution failed to pay for 1,218 shares of Naurobotics (about 8.2824 million won), leaving underwriters Daishin Securities and iM Securities to take them on.
Observers note that the underwriter's burden could intensify given the sizable amount of forfeited shares. Among the institution-allocated shares, those committed to be held for at least 15 days after listing account for 33% of the total. This figure falls below the regulatory ratio of 40%, requiring KB Securities to acquire 1% of the offering volume (70,000 shares) and hold them for six months after listing. Including the 83,333 shares of mandatory underwriter acquisition, this means KB Securities must hold 216,741 shares (about 2.6 billion won) for some time.
The problem lies in the difficulty of being optimistic about StradVision's share price trend after listing. In the earlier demand forecast, 35% of participating institutions bet below the bottom of the band, and the general subscription competition ratio was also the lowest among companies that newly listed this year. While the day-one tradable volume for new stocks is typically about 30% of the total, StradVision's stands at 48.97%, leaving potential supply-demand pressure.
To make matters worse, as the KOSDAQ market has slumped, valuation losses have mounted at securities firms, expanding the underwriter's burden. "We understand that all securities firms are incurring valuation losses related to IPO acquisition volumes obtained in the course of their underwriting work," an IB industry official said. "It is necessary to flesh out the framework of systems that can provide upward momentum to the KOSDAQ market, such as a segment promotion-relegation system."
