What happened
Digital Today reports that a sharp decline in South Korean stock indices on Oct. 15, driven by U.S. inflation data and concerns over AI investment profitability, has introduced uncertainty for AI startups preparing for initial public offerings. Alice Group is set to list on the KOSDAQ on Oct. 20 after raising 201.1 billion won for AI data centers, while Rablup and Xenon are in the process of bookbuilding for their own listings.
According to Digital Today, the KOSPI and KOSDAQ indexes fell more than 8 percent intraday on Oct. 15, triggering circuit breakers in both markets. The report attributes this move to a U.S. consumer price index reading that exceeded expectations and renewed concerns that profit generation is insufficient relative to the scale of AI infrastructure investment.
Alice Group, which is growing around its NeoCloud business, is scheduled to list on the KOSDAQ on Oct. 20. The company plans to use the approximately 201.1 billion won raised in its offering to build AI data centers and GPU infrastructure. Prior to the market selloff, Alice Group recorded a 388.8-to-1 competition ratio in institutional bookbuilding and a 408-to-1 ratio in retail subscription, with total deposits reaching 10.2599 trillion won.
Rablup, which developed the 'Backend.AI' platform for managing AI computing resources, is wrapping up institutional bookbuilding on Oct. 19. The company is offering 2.18 million shares with an indicative price range of 19,000 to 22,000 won. Rablup previously lowered its indicative price range following a correction request from the Financial Supervisory Service in September.
Xenon, an enterprise AI transformation solutions company, submitted a securities registration statement on Oct. 8 to list on the KOSDAQ. It is offering 2.2 million shares with an indicative price range of 9,700 to 12,200 won. Xenon supplies solutions to corporate markets using its self-developed 'GenOS' platform and plans to run institutional bookbuilding from Oct. 26 to 30.
Source details: digitaltoday.co.kr ↗
Why it matters
The market volatility directly impacts the valuation and investor sentiment for AI companies seeking public capital in South Korea. As institutional investors tighten screening criteria, the success of these IPOs will serve as a key indicator of whether the market can sustain high valuations for AI infrastructure and enterprise solutions despite broader economic headwinds and questions about the return on AI infrastructure investments.
The recent market drop has raised questions about whether the strong demand seen during the offering processes of these AI startups will continue after listing. Institutional demand forecasts that determine IPO prices are influenced by market conditions and investor sentiment, not just company performance.
A report by Eugene Investment & Securities noted that 68.8 percent of companies in the third quarter set offering prices at or above the top of their indicative ranges, down from 100 percent in the fourth quarter of the previous year. This suggests that institutional investors are tightening their screening of IPO candidates as corporate value and trading liquidity influence sentiment.
The outcome of these IPOs is significant for the broader AI industry in South Korea, as it will test the market's resilience to macroeconomic shocks and its continued willingness to fund AI infrastructure and enterprise solutions at high valuations.
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What to watch next
Investors should monitor the post-listing share price performance of Alice Group on Oct. 20 to gauge sustained demand. Additionally, the final offering prices set for Rablup on Oct. 21 and the subsequent retail subscription results for both Rablup and Xenon will indicate whether institutional and retail appetite for AI stocks remains strong despite the recent market plunge.
The post-listing performance of Alice Group on Oct. 20 will be a key indicator of whether investor interest in AI stocks remains strong despite the recent market volatility.
The final offering price for Rablup, set on Oct. 21, and the results of its retail subscription on Oct. 22 to 23 will provide further insight into retail investor sentiment.
The institutional bookbuilding results for Xenon, scheduled for Oct. 26 to 30, will indicate whether institutional investors are maintaining their interest in enterprise AI solutions amidst the market downturn.