This article appeared on the capital markets compass "Signal" at 3:26 p.m. on August 5, 2026.
One year after the introduction of the mandatory lock-up system for initial public offerings (IPOs), the measure is failing to deliver results, as the share of institutional investors willing to hold stocks after listing has recently fallen below 1% of the total. With the revitalization of the KOSDAQ market delayed longer than expected and the index falling sharply, institutions that had committed to long-term investment appear to have returned once again to short-term trading.
According to the investment banking (IB) industry on the 5th, cases in which institutions' mandatory lock-up ratios fall below 1% have been occurring in a row in recent demand forecasts for public offerings. Delicious, which completed its demand forecast on the 29th of last month, received orders for 303,699,500 shares, but only 0.1% of them pledged not to sell their shares for at least 15 days after listing. K&S I&C, which wrapped up its demand forecast two days later, saw its ratio come in at just 0.78%.
The market has noted that institutions' investment behavior is returning to what it was before the mandatory lock-up rules were tightened. Starting July 1 last year, the Financial Services Commission (FSC) required companies filing securities registration statements to give priority allocation of at least 30% (40% from this year) of shares set aside for institutions to those that commit to lock-ups. The aim was to curb institutions' short-term trading and encourage long-term investment. In fact, until just before the rules were tightened, most institutions' lock-up ratios were in the single digits, and from January to June last year, only one case—Daehan Shipbuilding—exceeded 50%.
Among 15 newly listed stocks (excluding SPACs) that held demand forecasts from January to May this year, six posted lock-up ratios exceeding 70%, while only two—Chaevi (0011T0) and Piece Peace Studio (0117P0)—recorded single-digit ratios. During the same period, the KOSDAQ index soared from 900 points to 1,229 points. However, as the KOSDAQ index subsequently plunged about 26%, cases with lock-up ratios exceeding 50% have also disappeared.
This has raised concerns that the government's push for KOSDAQ revitalization may be out of sync with the tightened mandatory lock-up rules. Although the policy claimed to expel zombie companies from the KOSDAQ and attract quality firms, the sharp drop in share prices of newly listed stocks after listing has persisted. Among 20 companies (excluding SPACs) listed on the KOSDAQ this year, only two—MakinaRocks (477850) and Cosmo Robotics (439960)—are trading above their offering prices.
The burden of unfulfilled lock-ups is falling on underwriters. From this year, if the institutional lock-up ratio based on allocated shares falls below 40%, underwriters must additionally acquire shares within a limit of 1% of the offering or 3 billion won. In fact, HLGenomics and Ingenia Therapeutics, which completed their demand forecasts last month, were found to have failed to meet the regulatory threshold. The listing underwriters for Delicious and K&S I&C are also expected to follow the same path.
