Approximately 73% of new KOSDAQ listings in the first half of this year have struggled to maintain their initial public offering (IPO) prices. Among these, only four companies established buyback options to protect investors. The Korea Financial Investment Association has moved to strengthen regulations regarding buyback options, but some market participants express skepticism about its effectiveness.
According to the Korea Exchange, a total of 15 companies, excluding special purpose acquisition companies (SPACs), were listed on the KOSDAQ in the first half of the year. Of these, 11 companies are currently trading below their IPO prices. Peace Peace Studio, which went public on June 8, saw its shares close at 5,330 won, a 75.2% drop from its IPO price of 21,500 won, marking the largest decline. Only four companies—Cosmo Robotics, License Medical, Justech, and MakinaRax—managed to exceed their IPO prices.
The number of companies that established buyback options remains low. Out of the 15 KOSDAQ listings this year, only Chaebi, Cosmo Robotics, License Medical, and Inventera have set up buyback options. This option allows investors to sell their shares back to the underwriting securities firm at 90% of the IPO price if the stock price falls below that threshold within a specified period after listing.
As of now, only Chaebi and Inventera meet the criteria to exercise their buyback options. Chaebi's shares have fallen to 6,900 won, a 43.9% decrease from its IPO price of 12,300 won, while Inventera's shares closed at 9,450 won, down 43.1% from its IPO price of 16,600 won. In contrast, Cosmo Robotics and License Medical are trading at prices 156.0% and 62.7% above their IPO prices, respectively, and do not qualify for buyback options.
Concerns about the effectiveness of the buyback option system have been raised consistently. A December analysis by the Korea Financial Investment Association found that only 16.3% of eligible companies among 27 new listings had actually exercised their buyback options. The unfamiliarity of the buyback option among investors, combined with varying guidance and procedures from different securities firms, has hindered proper utilization of this right.
In response, financial authorities have strengthened the obligation to inform investors about buyback options starting today through revisions to the model guidelines of the Korea Financial Investment Association. The updated guidelines include a new section for general subscribers, enhancing investor guidance on key dates such as the IPO deposit date, the date when buyback conditions arise, the possibility of losing rights, and other stages leading up to the option's expiration.
However, some industry experts argue that merely enhancing guidance on buyback options may not be sufficient. Currently, buyback options are mandatory for companies listed under technology special listings (for six months) and unprofitable listings (for three months). Other companies can voluntarily establish buyback options through discussions with underwriters and the exchange. According to the Financial Supervisory Service, only 17 cases of voluntary buyback options have been established among companies listed from 2023 to August 2025.
An industry insider noted, "The criteria for voluntarily establishing buyback options are themselves ambiguous. Given that most IPO stocks have failed to maintain their IPO prices after listing this year, there is little incentive for underwriters to actively set up buyback options."
* This article has been translated by AI.
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