[FETV] [IPO Success Formula] Samsung Securities, the Leader in Beauty IPOs: The Keys to Silicon2 and iFamilySC's Success

Silicon2 Korea Headquarters

[FETV=Reporter Minseok Park] Silicon2 and iFamilySC, companies that grew alongside the “K-Beauty boom,” have recorded outstanding performances and high stock returns since their IPOs, drawing attention to Samsung Securities' capabilities in consumer goods IPOs as the lead underwriter at the time.

Their success is credited to close collaboration among internal teams such as the IPO organization and research center, as well as the influence of highly skilled professionals. Since then, Samsung Securities has continued to successfully lead IPOs for various beauty companies.

◇ Listing Alongside the K-Beauty Boom and Continued Performance Growth

Silicon2 and iFamilySC both entered the KOSDAQ market in 2021 under the lead management of Samsung Securities, during the time K-Beauty was emerging as a global trend.

Both companies are beauty firms with high overseas export ratios, showing steady growth that attracted investor attention.

At that time, Silicon2, jointly led by Samsung Securities and Mirae Asset Securities, sold branded products to over 180 countries through its overseas cosmetics distribution platform, “StyleKorean.”

With the post-COVID surge in interest toward K-Beauty, the company quickly expanded its footprint in North America and Europe by promoting representative K-Beauty brands such as Chosun Beauty and Anua. Originally a semiconductor distribution company, Silicon2 shifted to cosmetics distribution in 2012 and has since maintained rapid growth.

During its IPO process in 2021, Silicon2’s growth potential and profitability were recognized without major difficulties. The demand forecast showed a competitive ratio of 1,437 to 1, leading to a public offering price fixed at the top of the price band, 25,000 KRW.Since listing, with continued profit growth and a bonus share issue in June 2022 allotting five new shares per common share, the stock price has increased about sevenfold compared to the offering price over three years.

Sales, which were 99.4 billion KRW in 2020, are expected to reach 691.5 billion KRW by 2024, nearly a sevenfold increase in five years. The number of employees has also grown from 150 to 250 over the same period.

A Silicon2 representative explained, “We rapidly introduced products tailored to consumer needs in each country through global base expansion in the U.S. and Southeast Asia and data-driven localized marketing. 

Our swift decision-making and execution capabilities allowed us to respond nimbly to market changes, which was also a key growth driver.”

One month after Silicon2’s listing, Samsung Securities solely led iFamilySC’s IPO. The company, focusing on K-color cosmetics such as lip tints and eyeshadows, rode the K-Beauty wave to enter KOSDAQ. The company also drew attention as it was led by Chairman Kim Tae-wook, a former entertainer. However, during the demand forecast, concerns about sustained performance led to the public offering price being set 30% below the price band’s bottom at 25,000 KRW.

Contrary to concerns, sales, which were 71.6 billion KRW before listing in 2021, are projected to exceed 204.9 billion KRW by the end of 2024, more than doubling. Along with this sales growth and two bonus share issues, the stock price has risen 307% compared to the offering price over three years.

Samsung Securities’ differentiated IPO organizational capability was a major factor behind these positive results in both performance and stock price.

According to Samsung Securities, the IPO team collaborates with the research center and retail (WM) division to discover companies and provide tailored listing strategies. Many experienced professionals with extensive consumer goods IPO experience are stationed, offering a “one-touch service” covering consulting through post-IPO management.

This extends to overseas NDR (Non-Deal Roadshows) support and fundraising through coordination with other departments after listing.

Thanks to these efforts, Samsung Securities received underwriting fees of approximately 944.76 million KRW and 738.3 million KRW from Silicon2 and iFamilySC IPOs, respectively, and successfully led other beauty company IPOs such as Vinau and Memebox last year.

Lee Gi-deok, who was in charge of Silicon2’s IPO due diligence, now heads Samsung Securities’ Capital Markets Division, while Yoo Jang-hoon, who led iFamilySC’s IPO, moved to Eugene Investment & Securities in 2023 as IPO Director.

Additionally, in 2023, Samsung Securities expanded its ECM (Equity Capital Markets) IPO teams from three to four within the Capital Markets Division to strengthen its organization.

◇ Consecutive IPO Withdrawals: Is Samsung Securities’ Prestige Shaking?

However, recently, Samsung Securities has faced criticism after consecutive setbacks in large IPO deals. Lotte Global Logistics and DN Solutions both withdrew their listings due to weak institutional demand forecasts, causing significant damage to the underwriter, given their anticipated multi-trillion KRW valuations.

In particular, Lotte Global Logistics was criticized for overvaluing its corporate worth by comparing itself to the number one distributor, CJ Logistics, based on PER (price-to-earnings ratio). This high valuation was also viewed as motivated by FI (financial investor) exit purposes.

An industry insider said, “Samsung Securities deserves credit for proactively discovering valuable consumer goods stocks even before the K-Beauty boom, but recent consecutive IPO withdrawals have raised doubts about their IPO capabilities.”