On the 18th and 19th of this month, 4.4 million subscription applications for LG Energy Solution public offering stocks were received, resulting in a margin of 114 trillion won alone. As competition for subscription intensifies, the amount that one individual investor receives through an equal distribution method is limited to one to two weeks. It was difficult for individuals to receive a large amount in the first place because the limit of IPO shares returned to individuals was only 25% of the total and the restriction of paying half of the subscription price as margin.
On the other hand, unlike individuals, institutional investors are allocated 55% of the total volume and are exempted from the obligation to pay margin. Thanks to this, an investment advisory company with only 5 billion won in capital applied for 7 trillion won worth of shares. The reason that the subscription price of the institution exceeded the original value of one Gyeong (Kyung) is also because some companies, which are not even capable, made reckless ‘betting’.
The public offering market is a structure in which institutions are allocated more stocks if they write out more stock at a higher price. As the myth of ‘invincibility’ continued in large IPOs such as SK IE Technology and Kakao Bank, imaginary orders from institutions also increased. As a result, the public offering price has risen sharply, leading to a vicious cycle in which individuals bear the burden.
Under the current system, the limit on the allocation of public shares by institutions is more than double that of individuals, and there is no limit on the amount when ordering. It is a ‘slanted playground’ where privileges are concentrated on institutions. In order to enjoy these benefits, some asset management companies are making money by swimming on the ground by first being allocated IPO shares with only the manager’s signboard.
Every large IPO, many people break up their savings accounts and raise money to pay margin because there is hope that they will be able to increase their assets a little by investing in promising stocks during difficult times. In today’s unfair market, individual investors have no choice but to degenerate into bridesmaids. In the case of large IPOs of great public interest, measures to prevent individual investors from being unilaterally alienated should be discussed from now on.