Video Game Decacorn Startup Krafton to Raise $5 Billion in IPO

The South Korean mobile video game publisher Krafton Inc. applied for a preliminary initial public offering (IPO) approval to the Korea Composite Stock Price Index (KOSPI). According to Seoul-based analysts, Krafton’s IPO could become South Korea’s largest share listing this year.

The Pangyo-based gaming company’s IPO also aims to raise as high as 5.6 trillion won ($5 billion). Moreover, Krafton plans to sell over 10 million shares and price them at 458,000 won to 557,000 per piece. Krafton would announce the final pricing and other deal details on July 22.

Krafton is also the first domestic decacorn startup, or a company with a $10 billion valuation, to list its shares on KOSPI. After its trading debut, Krafton expects its market capitalization to reach more than 28 trillion won ($24.8 billion).

South Korea’s IPO Scene

With a $5-billion estimated valuation, Krafton could become South Korea’s largest listing for this year. Separately, Samsung Life Insurance’s IPO, South Korea’s largest-ever domestic exchange listing, raised around 4.9 trillion won ($4.4 billion) in 2010.

Besides Krafton’s IPO, other domestic companies contributed to South Korea’s IPO market boom. Furthermore, South Korea, Asia’s fourth-largest economy, saw a massive increase in IPOs, with numerous industry-leading companies vying for competition.

For instance, the battery maker LG Energy Solution also recently began its IPO process, aiming to raise over $10 to $12 billion. The lithium-ion battery separator maker SK IE Technology also accumulated nearly 2$2 billion in its IPO.

In addition to potentially launching the most extensive local IPO, Krafton could become South Korea’s top game developer. If Krafton’s IPO goes as planned, it could outperform NCSoft, which had been holding the top spot for two decades.

Krafton’s Edge

Krafton, the developer behind the mobile game PlayerUnknown’s Battlegrounds (PUBG), also aims to break Coupang Inc.’s IPO record for the largest debut among domestic companies. Previously, Coupang’s New York Stock Exchange share listing acquired over 5.2 trillion won ($4.6 billion), becoming the current record holder.

Since the app’s launch in 2017, users have downloaded PUGB more than one billion times. PUBG also accounts for most of Krafton’s profits. The company’s filing stated that it had recorded a 1.67 trillion won revenue and 774 billion operating income in 2020.

Additionally, Krafton upgraded its PUBG universe with next-generation games, animated shows, and web cartoons. Krafton also plans to venture into other industries, including AI, deep learning, and entertainment, diversifying its business portfolio.

Krafton founder Chang Byung-Gyu currently holds the largest Krafton shares at 16.4% as of last year. Then, the Chinese company Tencent followed suit with a 15.5% share through a subsidiary.