Whether the first exception to the government's policy banning dual listings in principle will be granted is expected to be determined next week. With the results of the listing review for Duksan Neolux, a subsidiary of Duksan Hi-Metal (077360), set to be announced, a positive outcome is anticipated as the company has secured the required parent shareholder consent.
Starting with Duksan Neolux, the IPO pace of companies previously held back by dual listing issues, such as DTS and Mobius, is also expected to accelerate.
According to the investment banking (IB) industry on the 16th, the Korea Exchange will convene its Listing Committee on the 20th to review the approval of Duksan Neolux's preliminary listing examination. The Listing Committee, composed of experts from various fields including academia, law, accounting, and technology, is the key body that deliberates and votes on preliminary reviews. If the committee decides to approve, Duksan Neolux can submit a securities registration statement to the Financial Supervisory Service and proceed with public offering procedures for a KOSDAQ listing.
This marks the first case in which a subsidiary IPO review has been brought before the Listing Committee since the government announced its stance to ban dual listings in principle earlier this year. Duksan Neolux applied for preliminary review with the exchange last November, but the review was repeatedly delayed as regulators' opposition to subsidiary IPOs became more pronounced. In detailed guidelines released on the 6th of this month, the Financial Services Commission recommended that, to be classified as an exception to the dual listing ban, a company must secure parent shareholder consent under the "3% rule" method applied to the appointment of audit committee members under commercial law.
The market sees a low likelihood that Duksan Neolux will fall at the Listing Committee hurdle. At an extraordinary shareholders' meeting held by parent company Duksan Hi-Metal on May 29 this year, a majority of shareholders supported Duksan Neolux's listing. The approval rate based on voting shares (92.7%) and the approval rate based on total issued shares (72.8%) comfortably exceed the hurdles set by the FSC. Ko Young-ho, director of the FSC's capital markets division, also commented that "Duksan Neolux is effectively a company that has fulfilled the dual listing guideline standards."
If Duksan Neolux receives final approval, the listing race for companies previously stalled by dual listing issues is also expected to resume. DTS, whose review schedule has been delayed for 10 months, is expected to soon come before the exchange's Listing Committee. This follows its securing of a 90.3% approval rate based on voting shares and a 46.5% approval rate based on total issued shares from shareholders of parent company Dasan Networks (039560) on the 19th of last month. Mobius, which applied for KOSDAQ review at the end of April this year, also plans to decide whether to secure the consent of shareholders of its parent company SJG Sejong (033530).
A financial investment industry official explained, "During the preliminary listing review process, if there are typically grounds for disqualification, the exchange proposes withdrawing the review during the CEO interview conducted one to two weeks before the Listing Committee is convened. Duksan Neolux and DTS were not such cases, and with the Listing Committee schedule now in sight, it is true that a positive outcome is expected."
