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New IPO success formula?

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Gettyimagesbankk
Gettyimagesbankk

By Anna J. Park

As the country's IPO market is continuing to heat up with investors' increased interest in newly listing firms, it seems there is a new formula for a successful initial public offering: first, spin off the most lucrative business sector as a subsidiary from a parent company, and second, conduct the IPO of the subsidiary firm.

Previously, most listed firms in need of a cash inflow and investment chose the path of issuing corporate bonds or new stocks. Mezzanine financing ? a hybrid form of raising capital utilizing both senior debt and equity issuance ? has been frequently used to raise necessary capital for a firm's growth.

However, the recent trend of spinning off part of a business that is full of growth potential and undergoing an IPO, seems to not only benefit the newly created subsidiary b
Park Ji-won annajpark@koreatimes.co.kr


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