Elice, a South Korean company specializing in AI data centre infrastructure, saw its shares tumble 32% during their debut on Seoul's Kosdaq exchange on Tuesday. The collapse represents the poorest first-day performance for any Korean initial public offering valued at $100m or above, according to Bloomberg's analysis.

The company had secured 201.1bn won ($151m) through its offering, placing 2.22 million shares at 90,500 won apiece—the upper end of its pricing band. Trading commenced at 75,700 won, dipped to as low as 58,000 won, and concluded the day at 61,500 won. This marked the largest Kosdaq listing of the year, surpassed only by K Bank's $337m flotation in March.

Oversubscribed Yet Underwater

Pre-listing signals had appeared encouraging. The retail allocation drew 400 times the available shares, with individual investors committing approximately 10.3tn won in subscription deposits. However, the vast majority of these hopeful participants received minimal allocations. Retail investors claimed just 25% of the offering, valued at roughly 50.3bn won, and sustained losses of about $12m based on closing prices, Bloomberg calculated.

Retail investors may have blindly believed that IPO stocks would always go up

Jo Hyunik, investment division manager at Iroom Investment Advisors in Seoul

The broader market also retreated, with the Kospi benchmark declining 4% on the trading day. Major semiconductor firms experienced steeper losses: Samsung Electronics dropped 3% and SK Hynix fell 4%.

From Education Platform to Infrastructure Provider

Three KAIST doctoral graduates established Elice in 2015 as a coding education venture. The company subsequently pivoted toward AI cloud infrastructure, offering servers, liquid cooling systems, networking solutions and software packages. Its current focus centers on constructing modular data centres designed for dense deployments of AI processors.

Elice maintains profitability. Its prospectus indicated first-half revenues surged 200% to 34.4bn won alongside operating profit of 10.3bn won. The firm counts Vertex Ventures and Altos Ventures among its backers.

We're going all-in on becoming a full-stack AI infrastructure leader globally. This IPO is about giving ourselves the financial firepower to execute.

Jae Won Kim, chief executive of Elice

Kim indicated the capital raised would fund expansion of AI data centres throughout South Korea and internationally.

Caught in Broader Neocloud Turbulence

Elice belongs to the neocloud sector—companies providing rental access to AI computing resources. Investor confidence in this category has deteriorated sharply. CoreWeave experienced significant declines in both share and bond valuations recently due to debt concerns. Australia's Firmus withdrew its planned ASX listing, while Nscale confronts investor resistance regarding its IPO pricing.

Sentiment toward AI infrastructure has been highly volatile and often disconnected from underlying fundamentals

Albert Yong, chief investment officer at Petra Capital Management

Kim Dojoon, chief executive at Zian Investment Management, countered that Elice's financial position differs materially from CoreWeave's situation and cautioned against categorizing it as "particularly risky". He noted, however, that uncertainty persists regarding whether Elice can sustain its current profitability trajectory.

Source: The Next Web