Digital transformation (DX) and IT services company LG CNS (064400) is entering the stock market. Amidst the recent weak performance of newly listed stocks, there is interest in whether it can break this trend.
According to the Korea Exchange on the 5th, LG CNS will be listed on the Korea Composite Stock Price Index (KOSPI) market today. The public offering price is set at 61,900 KRW, with an expected market capitalization of approximately 5.9972 trillion KRW post-listing.
LG CNS garnered market interest by collecting over 21 trillion KRW in subscription deposits from general investors on the 21st and 22nd of the last month. In a demand forecast among institutional investors, 2,059 domestic and international institutions participated, achieving a competition ratio of 114:1. Around 99% of the participating institutional investors proposed a price at the top end of the price band, leading LG CNS to set the public offering price at the upper end of the desired band.
A point of concern is the relatively low proportion of companies committed to mandatory retention. Among the 2,059 institutions that participated in the demand forecast, only 52 committed to a 6-month retention period. In contrast, 149 institutions committed to a 3-month period, 105 to 1 month, and 12 to 15 days, while 1,741 institutions, making up 85% of the total, did not commit to any retention period.
Nonetheless, the overhang burden (potential selling volume) has been somewhat alleviated as major shareholders have decided on a lock-up period for their shares. Major shareholder LG and financial investor Crystal Korea have decided to lock up a total of 65,408,966 shares for six months post-listing. This amounts to 67.51% of the total 96,885,948 shares post-listing. Additionally, employee stock ownership (3,875,428 shares or 4.00%) will also be locked up for a year.
LG CNS specializes in IT consulting, system construction and operation, and digital transformation services based on cloud and AI technologies. The funds raised through the public offering are planned to be heavily invested in R&D in AI and cloud sectors to foster future growth drivers.