South Korea’s equity initial public offering (IPO) activity has sharply declined this year as attempts to boost corporate valuations encounter challenges linked to governance reforms and the entrenched dominance of family-run conglomerates known as chaebols. By early June, the country tallied just 15 new listings, generating around $700 million in proceeds, according to data from the London Stock Exchange Group (LSEG). This starkly contrasts with an average of 80 annual listings and approximately $8 billion in proceeds seen from 2020 to 2025. Notably, Malaysia’s IPO activity has nearly outperformed South Korea’s in both quantity and financial turnouts.
Despite this downturn in new listings, South Korea’s equity market boasts the top-performing major index globally, with the Kospi more than doubling its value over the past year. However, the situation for chaebols has shifted; once instrumental in South Korea’s industrial growth, they are now seen as hindrances to fostering new, independently listed firms. Experts like Polka Mishra from Javelin Wealth Management point to the 50% inheritance tax levied on estates exceeding 3 billion won (about $2 million), which discourages family owners from increasing valuations and share liquidity.
In a bid to address these challenges, South Korea launched the “Corporate value-up initiative” in 2024, aiming to eliminate the so-called “Korea discount,” where local shares trade at lower valuations than their international counterparts. Various amendments to the Commercial Act have been enacted to enhance minority shareholder protections and improve corporate governance practices.
Currently, the five largest conglomerates—Samsung, SK, Hyundai Motor, LG, and HD Hyundai—represent around 70% of the equity market capitalization in South Korea. Recent policy shifts will prohibit the practice of parent-subsidiary listings, which previously allowed a company’s subsidiary to list independently. This has been a contentious issue, as such listings could dilute the parent company’s value and allow controlling families to maintain dominance over the newly public entities.
Market reforms also include a plan to delist approximately 300 companies by next year, aiming to direct capital toward new enterprises and streamline the number of firms in the marketplace. The Korea Exchange’s CEO, Jeong Eun-bo, indicated that this strategy is intended to enhance trading fairness and broaden access for new ventures seeking to enter the market.
Despite the challenges imposed by reduced IPO figures, there is a growing belief that South Korea’s market is becoming more selective and quality-driven, with capital increasingly concentrated in a narrower array of industries. Data reveals that Korea has approximately 2,700 listed companies, which, while high, is significantly fewer than the roughly 5,000 in the U.S., even as South Korea’s market cap remains a fraction of its American counterpart.
On a positive note, analysts foresee a rise in IPOs from artificial intelligence (AI) infrastructure companies, buoyed by South Korea’s stronghold in the semiconductor sector, led by major players such as Samsung Electronics and SK Hynix. Senior analyst Kang Jin-hyuk from Shinhan Securities emphasizes the necessity of public funding and industrial support to sustain the country’s AI advancements, pointing to substantial investments made by state-led initiatives like the National Growth Fund into promising AI startups.
As South Korea navigates these complex dynamics, experts anticipate a resurgence in IPO activity once clear governance guidelines for parent-subsidiary listings are established, paving the way for more companies to actively pursue public offerings.
