April 25, 2024

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[THE INVESTOR] Institutions that bid for the share sale of Samsung Group’s contract drug-manufacturing arm appeared to be cautious on their long-term investment in the firm.

Ahead of its listing on the Seoul bourse on Nov. 10, many analysts have sanguine outlook on Samsung BioLogics for its growth potential backed by investment from the group, but investors are concerned that the firm has not been generating meaningful profits so far.

The Samsung BioLogics offer attracted heavy interest, with demand for the allotted to institutional investors reaching almost 281 times the amount available.

But only 7.4 percent of the total ordered size of 2.93 billion shares by institutional buyers agreed to keep their holdings for three months in return for early, guaranteed allocation, according to the country’s financial watchdog Financial Supervisory Service on Nov. 1.

The figure falls far short of the results from Samsung Group’s other listed affiliates such as Samsung SDS at 26.6 percent and Cheil Industries at 30.1 percent in their initial public offerings in 2014.

Institutions tend to have a long lock-in period for their investments in IPOs when they are bullish on the stock in the medium to long term.

Samsung BioLogics, which manufactures complex biologic drugs made from living cells, has been reporting losses every year since its establishment in 2011. It logged 203.6 billion won (US$177.70 million) in operating loss last year.

By Park Han-na (hnpark@heraldcorp.com)