Global Market: South Korea's Elice shares plunge 28% in market debut as data centre stocks shunned

SEOUL - Elice Group, a South Korean AI services company, saw its shares drop 28% during their market debut on Tuesday as the sector faced a downturn in investor confidence. The firm raised 201.1 billion won ($150 million) in its initial public offering (IPO), aiming to fund the development of portable modular data centers and related infrastructure using the proceeds.

However, analysts are now questioning whether substantial AI investments will yield returns soon, due to high inflation driving up borrowing costs, according to Kim Hak-joon, an analyst at Kiwoom Securities.

Investors are uncertain about the demand for AI, and it is challenging to gauge present demand accurately. In the same month, several data center firms postponed their IPO plans. Australia's Firmus, backed by Nvidia, and Blackstone-backed AirTrunk, postponed their Singapore REIT IPO. Additionally, SB Energy, a subsidiary of Japanese conglomerate SoftBank, had filed paperwork for a US IPO.

The Elice shares were trading at 65,300 won at the last market close, falling below the IPO price of 90,500 won. The IPO attracted institutional orders amounting to 388.84 times the available shares, as per a filing.

Elice reported that revenue for the first half of the year surged to 34 billion won and that it turned an operating profit of 10 billion won, reversing a 3.5 billion won loss for the same period in the previous year.