Daily Brief South Korea: Seoul Guarantee Insurance, Korea Zinc, Sanil Electric and more

In today’s briefing:

Korea’s Financial Regs Drop New IPO Allocation and Delisting Rules: What It Means and What to Expect
Korea Zinc: An Important Legal Decision to Disallow Appointment of Directors Using Cumulative Voting
Sanil Electric US$1.1bn Lockup Expiry – Tempting to Book 2x Gains in Six Months

Korea’s Financial Regs Drop New IPO Allocation and Delisting Rules: What It Means and What to Expect

We might see a liquidity crunch post-listing, with tighter regulations and mandatory holding drying up liquidity, causing more volatile price swings.
Big local players with heavy lock-ups will take a large allocation, creating significant overhang risk at the six-month mark. Stronger IPO eligibility boosts costs, pushing funds toward riskier trades.
Overall, this feels like a quick fix. Rather than focusing on long-term market improvements, we should focus on the new pricing patterns likely to emerge in the short term.

On 21 January, there was an important legal court decision to disallow the appointment of directors using the cumulative voting system at the Korea Zinc’s EGM on 23 January.
This legal decision is likely to favor MBK/Young Poong alliance in the control of Korea Zinc. The market increasingly favors the likelihood of MBK/Young Poong alliance winning this proxy battle.
Therefore, the chance of a further M&A battle has been reduced which is likely to further decline in the share price of Korea Zinc.

Sanil Electric (062040 KS) listed in Korea on 29th July 2024 after raising US$193m. Its six-month lockup will expire on 29th Jan 2025.
Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards. As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
In this note, we will talk about the lock-up dynamics and updates since our last note.

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