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March 2012
Korea Exchange (KRX)
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Table of Contents
I. Motivations for an IPO
II. KRX Overview
III. Performance and Composition
IV. Liquidity
V. Foreign Listings
VI. Listing Process and Requirements

2
I. Motivations for an IPO

3
Why IPO?
4
Business expansion / growth
New market entry
Debt repayment / balance sheet management
Founder or investor partial or full exit
Compensation for employees
Attract talented people / resources
Prestige of a publicly listed company
Oversight of auditing firm and KRX exchange ensures
transparency to investors
Capital Raising
Monetization
Reputation /
Transparency
An initial public offering gives managers the opportunity to raise growth capital, build greater brand
awareness or cash out of an investment without the burden of restrictive debt covenants
II. KRX Overview

5
Korean Exchange (KRX) Overview
6
KRX Highlights
The Korea Exchange (KRX), launched in 1956, is Asias 4
th
largest stock exchange
It consists of two trading platforms, the KOSPI and KOSDAQ, as well as the Derivatives Market
Highly liquid trading platform
Nominal listing fees compared to other exchanges

Description
Lists mid- to large cap, blue chip stocks

Lists small- and medium sized companies
with growth potential
Listed Companies 791 1,031
Foreign Companies 3 12
Market Cap
(As of 12/2011)
$927 bn $94 bn
LTM Trading Value
(As of 12/2011)
$1,513 bn $496 bn
Turnover Ratio
(Based on Market Cap)

152.3x 550.2x
KOSPI KOSDAQ
The KRX is an alternative financing solution for international companies seeking quick and cost-effective
access to capital via a best-in-class trading platform
Source: Korea Exchange: Listing Guide for International
Companies Note : USD 1 = KRW 1,125
Benefits to Listing on the KRX
7
Advantages to Listing Considerations to Listing
Significant liquidity yields fair valuations: trading value
to market cap exceeds other major Asian markets
Cost-effective capital raising solution: lower listing fees
and regulatory costs than peer markets
Active market for IPOs: more companies IPOd on the
KRX than on any other major Asian index in 2009
High percentage of foreign investors: yields better
information flows and increased brand awareness
KRX listing eases ability to penetrate Asian markets:
opportunity to expand business globally
KRX is still in a growth stage; as such, few U.S.
companies have listed, though several foreign
companies are in the pipeline
KRX listing does not carry the same prestige as listing
on the NYSE or NASDAQ
Corporate organization and preparation, including
audits from internationally recognized firms (e.g.,
Ernst & Young, Price Waterhouse, KMPG, Deloitte)
Language barrier; mitigated by the global nature of
the exchange, whereby all information is also
published in English

Listing Fee Comparison
8
Source: Korea Exchange: IPO Guide for Foreign Companies
Note : USD 1 = KRW 1,130 0.7, Y85, HK$8, S$1.5
KRXs listing fees are significantly lower than the fees of other major exchanges
Foreign Listing Case Study
Foreign companies that list on the KRX pay listing fees that are only 6% - 20% of fees required to list on other global
exchanges (excluding underwriters, auditors and legal fees)

IPO Listing fee Annual Fee Examination Fee Total in USD
KOSDAQ(KRX) KRW 1,286,000 KRW 229,000 KRW 5,000,000 KRW 6,515,000 $5,765
NASDAQ $75,000 $27,500 $102,500 $102,500
AIM (London) 36,020 5,463 41,483 $59,261
GEM(Hong Kong) H$200,000 H$200,000 H$400,000 $50,000
Mothers(Tokyo) 1,000,000 1,200,000 2,000,000 4,200,000 $49,412
Catallist(Singapore) S$31,200 $15,000 S$46,200 $30,800
III. Performance and Composition

9
Global Index Performance
10
KRX outperformed many leading global indices during the financial crisis and has rebounded at a faster rate,
returning more money to market participants than its competitors
Monthly Historical Performance of Global Indices
As of Dec 31, 2011, the KRX had the strongest returns among leading global indices; performance was +42% compared to
an average decline of (9%) among the peer group
KRX had the strongest performance during the financial crisis, with the index value only hitting a low of 65; the average
indexed low for the peer group was 52
0.00
50.00
100.00
150.00
200.00
KOSPI (Korea) SSEC (Shangai) STI (Singapore) HSI (Hong Kong) Nikkei 225 (Japan) FTSE 100 (London) DOW (US)
Market Activity
11
Source: Korea Exchange
$0
$200
$400
$600
$800
$1,000
$1,200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Market capitalization continues to grow exponentially while new share listings have moved at a slower, yet
steadier pace
KRX Market Capitalization ($mm)
KRX Number of Listed Companies
Historical Price to Earnings
12
Source: Bloomberg
Valuation levels for companies listed on the KRX are in line with those of other leading global indices
Historical P/E by Global Index
In 2011, KRX listed companies received more value for
their business than those listed on the DOW and FTSE

KRX P/E valuations are stable, the absence of volatility
ensures optimal pricing

0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x
2009
2010
2011
20.3x
13.5x
10.0x
15.8x
13.4x
12.6x
25.2x
16.4x
19.9x
Korea: KRX 100 U.S.: Dow Jones London: FTSE
Index Composition
13
Source: Korea Exchange
The KOSPI and KOSDAQ are comprised of a diverse cross-section of industries, providing listing firms and
investors with the data necessary to make important valuation and investment decisions
Index Composition by Industry
Broad industry diversification allows investors to fairly price securities, spawning greater interest and participation in the
exchange given its reliability
Heavy industry companies account for a significant share of both the KOSPI and KOSDAQ, however, growth among other
sectors, such as apparel and food and beverage, continue to add to each exchanges diverse composition profile
Auto manufacturer, Hyundai, steel-maker POSCO, electronics company Samsung and LG Chemical are the driving force
behind heavy industrys dominant presence
Industry diversification makes the KRX more attractive than the Hong Kong and Singapore exchanges
KOSPI as of FY2011 KOSDAQ as of FY2011
Chemicals,
16%
Finance, 12%
Elec. Eqpmt.,
11%
Distribution,
10%
Transport.
Eqpmt., 9%
Iron/Metal
Prod., 8%
Construction,
7%
Machinery,
7%
Food &
Bevg., 7%
Medical
Supplies, 7%
Apparel, 6%
IT
Components,
11% Semiconduct.,
9%
Machinery, 7%
Metal
Products, 6%
Telecom &
Broadcast, 6%
Vehicles &
Components,
5%
Chemicals, 5% Pharma, 4%
Computer
Serv., 3%
Other, 44%
IV. Liquidity

14
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
Korea Shanghai Tokyo Hong
Kong
Singapore
4.5x
4.3x
3.3x
3.0x
1.5x
Liquidity Ratio
(Daily Trading Value/Market Cap)
Liquidity
15
KRX provides a competitive liquidity proposition relative to other leading Asian capital market alternatives
Liquidity Overview
The KRX offers greater liquidity than many of the leading Asian exchanges, as measured by trading value to market capitalization
At YE11, the KRX had a liquidity ratio of 4.5x, the strongest of any major Asian index, including Tokyo and Shanghai, and
significantly outpacing the 3.3x average for the peer group
How does the KRXs strong liquidity position benefit issuers?:
Diversified investor base: investors gravitate towards markets with high trading activity
Securities are priced at fair value: greater consensus on pricing between buyers and sellers given high trading turnover
Easy cash-out: issuers and investors can quickly withdraw equity
Brand recognition: liquid markets receive greater attention from the investment community
Liquidity Comparison at YE 2011 Market Trading Statistics at YE 2011
Comp
Average
3.3x


Source: Korea Exchange, World Federation of Exchanges
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Korea Shanghai Tokyo Hong
Kong
Singapore
$906
$2,351
$3,125
$483 $345
$4,086
$10,199
$10,441
$1,428
$513
Market Cap Trading Value
Market Participants
16
Source: Korea Exchange
Korean retail and institutional investors are allocating a greater share of their funds to the equity market and
becoming more active participants in the KRX, creating stable demand and prompting more foreign listings
Buyers: Investors
KRX Participation:
Growth Among International Investors
Increased trading activity among foreign investors
Foreign investors account for approximately 30%
of KRXs market cap
The uptick in foreign trading illustrates the KRXs
growing importance among the global financial
community
Korean retail investors are more actively engaged in the
equity market given greater focus on long-term
investing
0%
20%
40%
60%
80%
100%
2007 2008 2009 2010
Government Corporations/Inst.
V. Foreign Listings

17
0
20
40
60
80
100
120
140
160
180
USA Korea Hong
Kong
UK Japan Singapore
2008 2009 2010
Foreign Issuers
18
Source: Korea Exchange
KRX IPO activity continues to outpace the activity on other Asian exchanges, and demand for international
listings remains strong
Sellers: Foreign Listings

Global IPO Issuance
s
Foreign firms are showing increased interest in the
Korea Exchange
19 foreign firms are currently listed on the Korea
Exchange and more than 60 firms from 10
countries are preparing to list
In 2010, more firms IPOd on the Korea
Exchange than on any other major Asian
exchange
Many of South Koreas leading companies list on the
KRX, including Samsung, POSCO, SK Telecom, LG and
Hyundai, illustrating the exchanges value and stability
The presence of multi-national Korean firms
legitimizes the exchange and will draw continued
interest among foreign issuers



Historical KRX Listing Activity
19
Note: USD 1 = KRW 1,200
Foreign
Listing Date
Exchange Company Country Industry
Public Offering
($mm)
Aug. 2007 KOSDAQ 3NOD China Technology: Multimedia Speaker $25.0
Nov. 2007 KOSPI HuaFeng China Manufacturing: Clothing $28.0
Jan. 2008 KOSDAQ Cowell E-Holdings China Electronics: Camera Devices $18.7
Dec. 2008 KOSPI United Technology China Manufacturing: Clothing $11.0
Mar. 2009 KOSDAQ China Food Packaging China Consumer Goods / Mfg: Cans $7.5
Apr. 2009 KOSDAQ Nepro IT Japan IT/Services: Online Databases $3.0
May 2009 KOSPI China Ocean Resource China Other: Fisheries $44.4
May 2009 KOSDAQ China Great Star China Retail: Shoes, Sportswear $42.5
Dec. 2009 KOSDAQ China Engine China Manufacturing: Engines $50.0
Dec. 2009 KOSDAQ Global SM Tech China Manufacturing: Machinery Products $15.4
Foreign companies are increasingly turning to the KRX to meet capital market financing needs, as
evidenced by the uptick in foreign listed companies
Foreign Listing Overview
International listings are increasing at a greater rate, compared to prior years, further diversifying the KRX
50 foreign firms are preparing to list on the KRX, 7 listed in 2010 compared with only 2 foreign firm listings in 2008;
65 companies are preparing to list
The favorable trend toward new foreign listings is expected to continue as investors look to place capital in markets with
high return potential
Korea rebounded fastest from the global economic crisis relative to Tokyo, Hong Kong and Singapore
Historical KRX Listing Activity (Contd)
20
Foreign
Listing Date
Exchange Company Country Industry
Public Offering
($mm)
Feb. 2010 KOSDAQ China HaoRan Recycling China Other: Paper Recycling 39.2
Mar. 2010 KOSDAQ China King-Highway China Consumer Goods: Health Foods 74.0
Apr. 2010 KOSDAQ New Pride U.S. Autos: Renewable Tires 11.6
Apr. 2010 KOSDAQ East Asia Sports International China Retail: Shoes, Sportswear 24.9
Jul. 2010 KOSDAQ Wayport China Manufacturing: Machinery 17.1
Sep. 2010 KOSDAQ Shenglong PV-Tech China Technology: Solar System 42.0
Nov. 2010 KOSPI Kolao Holdings Laos Autos: Sales 49.0
Jan. 2011 KOSPI China Gaoxian China Manufacturing: Fabric 149.3
June. 2011 KOSDAQ Wanli International Hong Kong Manufacturing: External tile 41.7
US presence on the Korea Exchange is likely to increase as the tangible benefits of listing become more
apparent to US companies amidst targeted KRX outreach efforts, building broader awareness
Foreign Listing Overview
Foreign listings have been dominated by Chinese companies given the KRXs early marketing push into China; with the
exchange now focusing on the U.S. and Japanese markets, further geographic diversification is anticipated
By 2012, the KRX expects foreign listings to have increased to 70; U.S. and Japanese companies are expected to
account for a greater share of listings, as are companies based in Thailand, Britain, Vietnam and the Philippines
Foreign Listings (Contd)
Note: USD 1 = KRW 1,200
Case Study New Pride
21

New Pride was the first U.S. company to be publicly traded on the KOSDAQ

Provides secondary services to integrated logistics companies in the U.S. and produces trailer tires. New Pride also
checks and tests related equipment and replaces components as containers are moved from ships to railroads
Integrated services include: shipping and transportation services between roads and railways
Founded in 1978 and based in California, the company has 32 branches in 11 states and 671 employees, only 8 of
whom are Korean
Sales:
Operating Profit:
Net Profit:
$58.3 million
$4.3 million (7% margin)
$4.0 million (6% margin)
Chairman: Edward Kim (age 69); first graduate of the Reserve Officers Training Corps in Korea
Accidentally acquired a tire recycling company which prompted expansion into logistics
Growth: Management believes the logistics business has significant growth potential
Enter new markets: Targeted the Chinese market and viewed listing on the KOSDAQ as a point of entry
Succession planning: Saw an IPO listing as a way to create greater business transparency; succession planning as
Mr. Kim does not intend to pass the business to his children
Capital Raised: $11.6 million
Shares Issued: 1.85 million
Price: $6.26 per share
Background
Company Description
KRX Listing Rationale
Management
Pricing
Operating
Performance
New Pride Logistics
Note: USD 1 = KRW 1,200
Foreign Listing: Stock Price Performance
22
Foreign listings have performed well since their initial KRX IPO
Stock Price Performance
A majority of foreign issuers have realized an increase in equity value since listing on the KRX
The average stock price has increased 5% since the issuance date
US-based New Prides underperformance is driven by several internal operational factors:
(1) Sales underperformance, (2) lower operating margins given increased raw material costs (e.g., rubber); (3) weak
outlook for the truck freight industry
Price History Issuance Price : %change Market Cap
Foreign Company IPO Date
IPO
Issuance
Next Day
Close
02/24/2012
Next Day
Close
Current
IPO Funds
(US$ mm)
Shares
(mm)
Current Market Cap
(US$ mm)
Wanli International 2011-June

$3.40
$2.70 $3.90 -20% 13% $42 12 $192
Kalao Holdings 2011-Oct $4.0 0

$5.20
$8.30 29% 108% $47 12 $318
East Asia Sports 2009-May $4.20

$3.20
$2.20 -23% -48% $25 23 $179
New Pride 2010-Apr

$6.30

$7.70
$1.90 24% -70% $12 2 $13
China King-Highway 2010-Mar na

$2.90
$2.30 na na $74 80 $179
China Hao Ran 2010-Feb

$3.90

$3.80
$2.40 -4% -39% $39 40 $95
China Engine 2009-Dec na

$5.70
$3.50 na na $50 40 $134
China Ocean Resource 2009-May

$2.60

$6.80
$4.30 165% 65% $44 17 $320
Average: 28% 5% $42 28 $179
VI. Listing Process and Requirements

23
Listing Process
24
Source: Korea Exchange: IPO Guide for Foreign Companies
6 months to
1 year
Prep.
Within 2
Months
Eligibility
Review
1 to 1.5
Months
Public
Offering
Within 7 Days Listing
Application for Listing
Eligibility Review
Listing Committee
deliberates
Notification of results


Select investment bank to
manage process
Appoint auditing firm
Corporate organization
and preparation
Due diligence

File securities registration
statement
Investor Relations
meetings
Determine demand and
pricing
Remittance of funds to
issuers account
Application for Initial
listing
Listing approval
notification
Listing ceremony followed
by trading of shares on
KRX


The KRX listing process can take 4 6 months following the preparation process

25
Positive income from ongoing business before tax in the
latest fiscal year and $3 million (KRW 3 bn) in shareholders
equity
$9 million (KRW 10 bn) in Sales and Market Capitalization of
$27 million (KRW 30 bn), OR
$2 million (KRW 2 bn) in Net Income, OR
10% Return on Equity (Net Income / Equity Capital)

5 years of operating history
Globally recognized auditing firm
Largest shareholder must hold shares for one year after
issuance; after 6 months can sell 5% of shares monthly
Financial
Operational
Summary Key Minimum KRX Listing Requirements
KOSDAQ: Minimum Requirements:
Note : USD 1 = KRW 1,125
Listing Requirements for IPO Candidates
26
Description
Lists mid- to large cap, blue chip stocks
Lists small- and medium sized companies with growth
potential
Operating
History
At least 3 years At least 3 years
Size
(min. requirements)
Shareholders Equity: KRW 10 bn, OR
Market Capitalization: KRW 20 bn
Shareholders Equity: KRW 3 bn, OR
Market Capitalization: KRW 9 bn
Operating
Performance
(min. requirements)
Must satisfy 1 of 3 operating requirements
Sales & Income
1. Sales: KRW 30 bn in current year; 3-year average of KRW
20 bn, AND
Earnings : must have realized an operating profit, a profit
before income tax from continuing operation and a current
net income
Income must satisfy 1 of 3 income requirements:
a. Income: (i) KRW 2.5 bn current year and (ii) KRW
5.0 bn for sum of last 3-years
b. ROE: (i) 5% in current year and (ii) 10% for sum of
last 3-years
c. If equity cap exceeds KRW 100 bn: (i) 3% ROE or
KRW 5 bn of income for current year; (ii) positive
operating cash flow
2. Sales & Market Cap
Sales: KRW 50 bn (current), KRW 100 bn in market cap
3. Sales, Market Cap, & Operating Cash Flow
Sales: KRW 70 bn (current); KRW 50 bn market cap; KRW 2
bn operating cash flow
Must satisfy 1 of 3 operating requirements
1. ROE: 10% (Net Income/Equity Capital)
2. Net income: KRW 2 bn
3. Sales: KRW 10 bn in current year and market cap of KRW
30 bn

Capital cant be impaired at end of fiscal year
Positive income from ongoing business before tax (current)
KOSPI KOSDAQ
Listing Requirements for IPO Candidates (contd)

27
KOSPI KOSDAQ
Description
Lists mid- to large cap, blue chip stocks
Lists small- and medium sized companies with growth
potential
Share Distribution At least 1,000 individual shareholders
Share distribution to satisfy 1 of 4 requirements:
1. Minority shareholders must hold at least 20%
2. At least 25% offered publicly
3. Issue minimum of 1 mm shares with either KRW 50 bn
equity capital or KRW 100 bn market capital; 10%
offered to public
4. If offering in Korea and abroad: 10% must be offered
publicly and 1 mm shares must be offered in Korea
At least 500 minority shareholders
Share distribution to satisfy 1 of 5 requirements:
1. Minority shareholders must hold at least 25%, or at least 10%
must be offer publicly
2. Issue minimum of 1 mm shares with either KRW 50 bn equity
capital or KRW 100 bn market capital; 10% offered to public
3. If listed on foreign securities, 300,000 shares must be publicly
offered in Korea
4. At least 25% must be offered publicly
5. If offering in Korea and abroad: 20% must be offered publicly
and 300,000 shares must be offered in Korea
Auditors Opinion Unqualified for current year Unqualified for current year
(Initial Listing) US or Korean GAAP or IFRS financial statements
Audit from world class (e.g., Big 4) accounting firm
If a Foreign Auditor: 5 yr operating history; 50 members of CPA; sales of KRW 10 bn; audit quality management
contract (100 member country, 100,000 member CPA)
Share Transfer No restriction placed on transfer of shares No restriction placed on transfer of shares
Change of Largest
Shareholder
No change of largest shareholder for one year period
prior to application
No change of largest shareholder for one year period prior to
application
Lock-up Period Largest shareholder: 6 months Largest shareholder: 1 year; after 6 months 5% of shares can
be disposed monthly
28
Annual Report: within 120 days of fiscal year end
Quarterly Report: within 60 days of end of quarter
Material information: e.g., matters pertaining to business operation, credit and liability,
investment, profit/loss, lawsuits, relationships between holding companies and subsidiaries
Disclosure of results that the KRX releases about rumor, news and sudden change in stock price or
trading volume
Future business plans, earnings forecasts are disclosed publicly prior to disclosing to a selected
person
Disclosure of events: merger, share swap, business takeover or transfer, buyback or disposal of
treasury stock
Disclosure of any matters that could have significant influence on an investors investment
decision, that the company makes voluntarily
Periodic
Disclosure
Fair
Disclosure
Notable
Events
Disclosure
Timely
Disclosure
Voluntary
Disclosure
Special
Disclosure
Ongoing Disclosure