South Korea’s Elice shares jumped 30% to 79,900 won on October 21, rebounding after a weak market debut. The Seoul-based firm previously fell 32% on October 20. This recovery offered relief to many retail investors who got shares during the IPO, which raised $151 million as the year's largest exchange listing.
South Korea's data centre firm Elice saw its shares jump 30% in Wednesday's trade on October 21, to 79,900 won, rebounding from a slump during its market debut on Tuesday.
The recovery has offered some relief to retail investors, who were the biggest participants in Elice's IPO. The Seoul-based neocloud service provider made a weak debut on the Kosdaq, listing at a steep 33% discount to its IPO price despite raising about $151 million in what was marked as the exchange's largest IPO of the year.
Elice shares fell as much as 32% to 61,400 won in early trading on October 20. The company priced its shares at 90,500 won apiece, at the top of the marketed price range, giving it a post-listing market capitalisation of more than 1 trillion won.
The weak debut came at a time when global semiconductor stocks were under pressure amid expectations of higher interest rates and concerns about the sustainability of AI infrastructure spending.
Elice raised about $150 million through its IPO and said it planned to spend most of the proceeds on launching portable modular data centres and developing related infrastructure.
The company priced its offering at the top of the range and attracted strong interest from South Korean retail investors, who deposited roughly 10.3 trillion won in subscription funds in hopes of securing shares. The retail portion of the offering was oversubscribed more than 400 times.
To attract investors, Elice highlighted a 200% surge in first-half revenue to 34.4 billion won, according to its prospectus. The company also swung to an operating profit of 10.3 billion won, while earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped more than elevenfold to 23.2 billion won, according to The Straits Times.
The weak debut also weighed on South Korea's broader stock market, which has been a major beneficiary of the global AI trade and a gauge of investor sentiment towards the sector. The benchmark KOSPI fell 3.73% to its lowest closing level since April 7.
War-driven inflation has pushed interest rates higher, increasing the cost of servicing debt for companies investing heavily in AI. S&P Global estimates that the world's largest technology companies may have more AI-related liabilities than are currently known.
Hyperscalers have announced massive capital expenditure programmes in recent quarters to expand AI infrastructure. However, analysts believe higher interest rates could put pressure on their profit margins, while elevated valuations have added to concerns about whether the expected returns from AI investments will justify the spending.