AstraZeneca's Korean partner SK Bioscience doubles in trading debut

[SEOUL] Concerns over side effects of AstraZeneca's Covid-19 vaccine failed to dent the trading debut of its Korean partner SK Bioscience, which more than doubled on Thursday, boosting its market cap to 12.9 trillion won (S$15.40 billion).

Following a record amount of bids from retail investors for its US$1.33 billion initial public offering (IPO), SK Bioscience saw its shares gain by their 160 per cent daily limit to 169,000 won per share from the float price of 65,000 won.

The heavily subscribed IPO by SK Bioscience, the local manufacturer of AstraZeneca's vaccine, is the largest domestic listing since game developer Netmarble raised US$2.39 billion in 2017. It comes just a week after a hot US$4.6 billion New York share sale by e-commerce giant Coupang drew attention to Korean listings globally.

The strong performance by SK Bioscience makes the vaccine-making unit of family-controlled conglomerate SK Group the 28th-largest stock on the benchmark Kospi, just behind cosmetics group Amorepacific.

Its debut comes as several European Union countries such as Germany and France temporarily suspend the Astra vaccine roll-out on worries about side-effects. The World Health Organization said the vaccine should continue to be administered. The European Medicines Agency is due to provide a definitive assessment on Thursday.

"It is difficult to tell exactly how much negative impact this will have on SK Bioscience," analyst Douglas Kim said in a note on Smartkarmabefore its trading debut.

South Korea plans to inoculate 12 million people before July, with early batches of the vaccine relying mostly on Astra shots manufactured in SK Bioscience's factory in the south-eastern city of Andong. SK Bioscience also signed a licensing agreement last month with Novavax to manufacture its Covid-19 vaccine in South Korea.

Korean health authorities said on Wednesday that it had so far found no reports of blood-clotting in the country after AstraZeneca vaccine shots. President Moon Jae-in is set to receive the Astra vaccine next week.

SK Bioscience is among the slew of Korean companies trying to ride on the boom market after the country's benchmark Kospi soared 30 per cent in 2020 on a flood of retail buying.

Drugmakers and healthcare stocks were among the biggest winners during the pandemic, though their stock price gains have lost steam in 2021. SK Biopharmaceuticals, another biotech arm of SK Group focusing on new drug development, saw its shares jump more than three times from its IPO offer price in 2020.

That surge in Kospi has prompted local companies from KakaoBank to Krafton to seek a listing of their shares, potentially making 2021 a record year for IPOs in South Korea.

SK Bioscience benefitted from retail investors' hunger for shares. Korean mom-and-pop buyers poured in a record 63.6 trillion won to get their hands on SK Bioscience shares, beating the previous 59 trillion won in retail bids for last year's US$321.5 million IPO by Kakao Games, the gaming unit of South Korea's leading messaging app, Kakao Corp.

Institutional investors, who made up 55 per cent of the SK Bioscience IPO, also poured into the offering. Bids from institutional investors were oversubscribed by 1,275 times.

SK Bioscience has said it is planning to use the IPO proceeds for research and development, as well as establishing a plant to produce the next-generation pneumococcal vaccine in its pipeline, among other things.

SK Chemicals, the SK Group unit that held 98 per cent of SK Bioscience stock before the IPO now has 68 per cent, having sold 7.65 million share sales during the float.

The deal was arranged by NH Investment & Securities, Korea Investment & Securities and Mirae Asset Daewoo.

BLOOMBERG