Improved valuations, state-level AI push to encourage domestic IPOs
Several South Korean artificial intelligence-related startups are eyeing local stock market listings, fueling expectations of a homegrown AI boom.
Rebellions, Korea’s first AI semiconductor unicorn, is expected to apply for a preliminary approval in August after closing its first-half books. Samsung Securities and Korea Investment & Securities have been appointed as the lead underwriters for the initial public offering.
Though tech startups usually opt to debut on the the Kosdaq, using the secondary market's special listing track that allows firms to go public based on technological potential rather than strict financial requirements, Rebellions is expected to list on the benchmark Kospi.
The move stems from Rebellions' improved financials. Its revenue has been on a steady upward trajectory, rising from 2.74 billion won ($1.8 million) in 2023 to 10.3 billion won on a consolidated basis in 2024, following its merger with Sapeon Korea, an AI chip spinoff from SK Telecom, and surpassing 27 billion won last year.
Having recently raised 640 billion won through a pre-debut funding round, industry officials estimate that its IPO timeline is shortening.
While Rebellions has hinted at going public on the the US' tech-focused Nasdaq exchange, it is now expected to pursue a domestic listing first, and seek other ways to gain US exposure. This could be by listing American Depositary Receipts,or ADRs, an approach pursued by Korean chip giant SK hynix.
“When it comes to the question of whether to list in Korea or the US, I believe we should pursue both,” CEO Park Sung-hyun said at a press event held in December.
“In terms of a timeline, domestic listing should come first. Meanwhile, there are already quite a number of companies with dual listings in Korea as well.”
Local AI startup Upstage is also expected to file for listing within this year, having selected KB Securities and Mirae Asset Securities as the lead underwriters.
While Upstage plans to gain access to a trove of Korean-language data accumulated on Daum to strengthen its proprietary large language model Solar through acquiring AXZ, the operator of Daum, the move is expected to boost its valuation. The startup is reportedly seeking a valuation of 2 trillion to 4 trillion won through the IPO process.
Though it had been customary for high-profile Korean startups to chase Wall Street valuations, following the footsteps of e-commerce giant Coupang and Naver's subsidiary Webtoon Entertainment, the tide is shifting, as valuations in the local stock market have been improving backed by eased Korea discount.
“While tech-driven companies had sought US market debuts citing higher valuations, the recently improved local market environment appears to be turning the tide,” an official at a local brokerage firm said.
Another factor driving the shift is the government’s push to bolster the country's AI competitiveness, including large-scale policy financing initiatives.
The government plans to allocate a total of 50 trillion won to the AI and semiconductor sectors over the next five years through funding programs. Of this, 10 trillion won is set to be invested this year alone.
With a significant number of local AI startups expected to benefit from these funding schemes, overseas IPOs may become less attractive.
“The market deems it inappropriate for companies that have grown in Korea to list overseas, and receiving policy funding makes that view stronger,” an official at a local firm considering an IPO said.
Other AI startups are also weighing IPOs in Korea as they raise pre-IPO funding.
Furiosa AI, a leading startup specializing in AI semiconductors, is raising 750 billion won from investors in what is anticipated as the last funding round before an IPO. Expected to earn a valuation of over 2 trillion won, the startup is seeking to make market debut in 2027.
Edge AI chip developer DeepX is also seeking to go public in Korea. Though US bourse operators sought the startup to go public in the US, betting high on its valuation, its CEO Lokwon Kim underlined the startup would go public in Korea.
DeepX is currently focusing on securing investment from the National Growth Fund. Though it is yet to appoint an IPO underwriter, the company expects to raise more than 600 billion won in pre-IPO funding.
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