Kakao Games to Enter Stock Market Next Month... Starting with Market Cap of 1.7 Trillion KRW

[Asia Economy Reporter Koh Hyung-kwang] Kakao Games has confirmed its entry into the stock market next month and has officially begun the initial public offering (IPO) process. This is a reattempt two years after withdrawing its IPO plan in 2018. The expected market capitalization upon listing is approximately 1.7 trillion KRW.

According to industry sources on the 8th, Kakao Games submitted a securities registration statement to the financial authorities on the 3rd for listing on the KOSDAQ market. Kakao Games plans to finalize the public offering price through demand forecasting over two days on the 26th and 27th, followed by investor subscription on September 1st and 2nd, and is expected to be listed on the stock market around mid-September.

Kakao Games plans to issue 16 million new shares through the public offering. The offering price is set between 20,000 and 24,000 KRW per share. If the offering price is set at the upper limit of 24,000 KRW, Kakao Games’ market capitalization will be about 1.75 trillion KRW. This is similar to the market capitalization of Com2uS, a game company listed on KOSDAQ in 2007, which was 1.6199 trillion KRW as of the closing price on the 7th.

Kakao Games plans to use the funds raised through this public offering to strengthen development capabilities, secure a lineup including new intellectual property (IP), and invest in expanding its global market presence. Specifically, 209 billion KRW will be allocated for operating funds and 107 billion KRW for acquiring securities of other companies.

Kakao Games is Kakao’s game-specialized subsidiary launched in April 2016. Its advantage lies in utilizing the Kakao brand’s recognition and platform. It particularly excels in publishing. Publishing involves signing contracts with game developers for distribution rights, handling game releases and marketing, and sharing profits with the developers. On PC, it has generated stable revenue through publishing games such as Battlegrounds, Path of Exile, and Black Desert.

Kakao Games recorded sales of 203 billion KRW and operating profit of 28.7 billion KRW in the first half of this year. Compared to last year’s full-year performance of 391 billion KRW in sales and 35 billion KRW in operating profit, sales are similar but operating profit has significantly increased.

Yeo Min-soo, co-CEO of Kakao, said during the Q2 earnings conference call on the 6th, "Kakao Games, the first company within the Kakao group to go public, submitted the securities registration statement on the 3rd and aims to complete the listing within September. Through this IPO, we hope to contribute to the development of Korea’s game industry and achieve greater growth by introducing competitive and excellent games in the global market." Meanwhile, Kakao Games had previously withdrawn its KOSDAQ listing process in 2018 due to audit issues.