The fallout from SpaceX’s initial public offering is rippling through South Korea’s capital market. Mirae Asset Securities, the only domestic underwriter involved, received no allocation of the offering shares at all, igniting anger among investors whose money had been tied up in the subscription.
SpaceX was listed on Nasdaq on the 12th. According to a filing with the U.S. Securities and Exchange Commission (SEC), Mirae Asset Securities had been slated to receive 2,314,815 shares. But Goldman Sachs, the lead underwriter, ultimately cut the entire allocation. The subscription deposits paid by domestic professional investors were fully refunded.
The loss was reflected in the numbers. SpaceX began trading at $150, well above its offering price of $135, and closed at $160.95. Any profit that could have been earned at the offering price vanished entirely.
◆ ‘Korea passing’ controversy grows as Japan gets shares and Korea gets none
The backlash intensified because of the contrast with Japan. Goldman Sachs did allocate shares to Japan, another Asian country. Mizuho Securities, under the same conditions as Mirae Asset, applied for $6.2 billion worth of shares and received $2.2 billion, or about 330 billion won. As Korea was left empty-handed, talk of “Korea passing” quickly spread.
Still, many say this should not be viewed as outright discrimination solely against Korea. Some overseas crypto exchanges, other than Mirae Asset, also failed to receive allocations, and in highly oversubscribed blockbuster IPOs, it is not unusual for global investment banks to prioritize sovereign wealth funds and mega-sized institutions first. Within the industry, there is considerable support for the view that the issue reflects weak bargaining power rather than discrimination.
◆ Regulations that kept Korea tied down, and marketing built on unconfirmed allocations
The more fundamental problem lay at the starting line. While Mizuho raised more than 1 trillion yen by taking subscriptions from retail investors as well, Korea had to accept subscriptions only in private placement form from institutions and professional investors. A public offering to ordinary individual investors had to be scrapped because it did not receive approval from the financial authorities. Some observers say the deal was scaled back under pressure from the authorities, amid a tight schedule and concerns about foreign exchange volatility.
Marketing also helped fuel the controversy. In U.S. IPOs, final allocations can change at the very last minute at the underwriter’s discretion. Yet promotional efforts heavily emphasized shares that had not been finalized. A representative example was the spacecraft and aviation ETFs launched by Mirae Asset Global Investments and Korea Investment Trust Management, which touted “inclusion at the offering price.” When the allocation fell through, some ETFs had to urgently revise their strategies. Among investors, calls are growing to hold responsibility for presenting unconfirmed shares as if they were guaranteed.
Mirae Asset Securities explained that the underwriting quantity disclosed in the SEC filing only reflected participation in the underwriting group and did not mean a confirmed allocation; actual quantities are decided at the lead underwriter’s discretion. The company is reviewing compensation measures for professional investors, and financial regulators have also begun examining how the zero-share allocation came about.
◆ OpenAI and Anthropic are next in line, making regulatory reform the key issue
The weight of this incident lies in the fact that it is unlikely to be a one-off. If major U.S. private companies such as OpenAI and Anthropic line up for listings, domestic investors’ demand for overseas IPOs will only grow. But the system for regulating the naming of overseas IPO sales, advance risk disclosures, and ETF inclusion marketing has not yet been organized.
The answer lies in two directions. One is to strengthen domestic securities firms’ ability to secure global allocations and improve lead underwriter bargaining power. The other is to update outdated regulations that either block participation in overseas IPOs or leave them in a vague, half-finished state.
There is clearly a need to put the brakes on marketing that sells unconfirmed allocations as if they were guaranteed. What SpaceX revealed was not merely one securities firm’s mistake, but Korea’s position in the global capital market.