Elice Shares Fall 30 Percent in South Korea Market Debut

South Korean artificial intelligence company Elice Group saw its shares plunge 30 percent on their Tuesday market debut, as concerns over AI investment returns and uncertain demand weighed on investor sentiment. The company raised 201.1 billion won ($150 million) through its initial public offering, with plans to direct most of the proceeds toward portable modular data centers and related infrastructure.

Elice shares last traded at 63,600 won, down from the IPO price of 90,500 won, according to market data cited in the source report. Despite the weak debut, the offering attracted institutional orders worth 388.84 times the number of shares available, according to a regulatory filing.

The decline came amid a broader reassessment of AI-related investments, as elevated inflation kept borrowing costs high and investors questioned whether substantial spending on artificial intelligence infrastructure would generate returns quickly enough.

Ke Yan, head of research at Singapore-based Shenton Research, said Elice's IPO pricing was set on Oct. 6, before the recent sell-off in AI-related stocks. The subsequent market downturn has increased scrutiny of companies seeking to raise capital for AI infrastructure.

"Elice's debut shows the AI infrastructure trade has moved from 'build at any cost' to 'who is paying and for how long'," said Ke Yan, head of research at Singapore-based Shenton Research.

Yan said investors were increasingly focused on whether companies using computing infrastructure could meet their financial commitments. That concern could affect other planned listings across the region.

"Until the AI labs that rent ... capacity show they can fund their compute commitments, new listings across the region will likely be priced in that risk premium," said Ke Yan, head of research at Singapore-based Shenton Research.

Several data center companies have shelved or postponed public offerings this month. Australia's Firmus, which is backed by Nvidia, has shelved its IPO plans, while Blackstone-backed AirTrunk postponed a Singapore real estate investment trust listing. SB Energy, a unit of Japanese technology investment conglomerate SoftBank, had also filed paperwork for a US IPO.

Kim Hak-joon, an analyst at Seoul-based Kiwoom Securities, said uncertainty over the scale of demand for AI services was complicating investment decisions. The difficulty of measuring current demand has added to concerns about the sector's growth prospects.

"Everyone is not sure how much demand for AI there will be and it is hard to estimate current demand," said Kim Hak-joon, an analyst at Seoul-based Kiwoom Securities.

Elice reported stronger operating results for the first half of the year despite the weak share debut. According to company figures, revenue tripled to 34 billion won, while operating performance shifted to a profit of 10 billion won from a loss of 3.5 billion won in the same period a year earlier.