KakaoBank, Kakao Corp.’s Internet-only retail lender, is set to acquire 2.55 trillion won ($2.2 billion) after pricing its initial public offering (IPO) at the highest market range. According to banking industry sources, KakaoBank’s IPO attracted the largest bid amount from investors in a domestic share listing.
Moreover, the company’s latest achievement follows the August IPO delay of KakaoPay Corp., Kakao’s digital wallet and mobile payment unit. KakaoPay recently experienced significant growth, targeting to launch mobile trading systems and set up digital non-life insurances.
South Korea’s Financial Supervisory Service (FSS) recently requested a registration statement correction for KakaoPay’s IPO. Following the FSS request, KakaoPay readjusted its share listing, institutional investor book-building, and retail investor subscription schedules.
Earning Investors’ Attention and Support
Besides making KakaoBank South Korea’s only digital bank to publicly list shares, the IPO drew bids from more than 1,800 domestic and overseas institutions. During the KakaoBank IPO book-building process, investment banking industry sources announced that the company accumulated over 1,700 oversubscriptions.
Given the increasing market competition, KakaoBank priced its shares between 33,000 to 39,000 won per piece. KakaoBank would also begin trading its shares on KOSPI, the country’s main bourse, on August 6 after receiving investor subscriptions.
If the Internet-only lender achieves its goal, its corporate value could reach 18.5 trillion won ($16 billion). Additionally, KakaoBank selected Credit Suisse Securities and KB Securities as the underwriters for its market debut.
Breaking IPO Records
The IPO would also place KakaoBank as South Korea’s third-largest retail lender, ranking right after KB Financial Group Inc. and Shinhan Financial Group Co. At present, KB Financial Group’s market value stood at 21.54 trillion won. On the other hand, Shinhan Financial Group’s market value amounted to 19.86 trillion won.
KakaoBank’s IPO also has the potential to become the second-largest share listing for this year after Krafton Inc.’s market debut. After receiving preliminary approval, the PUBG developer’s IPO raised 5.6 trillion won, generating the largest South Korean listing this year.
In addition to this record, the company’s IPO could become South Korea’s third-largest IPO since Samsung Life Insurance went public for 4.9 trillion won in 2010. Similarly, the game developer and publisher Netmarble Corp. raised 2.7 trillion won in its share debut in 2017.
Ongoing Valuation Debate
“Everything about us is different from other listed financial companies in a huge way, as we are in a new sector that did not exist before,” said Yoon Ho-Young, CEO of KakaoBank, at an online press conference.
Furthermore, the FSS noted inflated valuations among recent IPOs. Securities analysts also took notice of local traditional bank stocks’ undervaluation. Previously, a few traditional banks, including Hana, KB, Shinhan, and Woori, unveiled their plans to enhance their respective online platforms.
According to these banks, the move would enable them to compete with KakaoBank’s innovative but disruptive business model and services. Currently, KakaoBank offers highly convenient merchant loans and mortgages, penetrating the core traditional banking areas.
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