Pay and Bank also set sights on IPO... Kakao advancing as a 'Fintech Giant'

Kakao Pay to Go Public in Early Next Year, Kakao Bank in Second Half
Combined OTC Market Cap and Corporate Value Exceed 85 Trillion Won

[Asia Economy Reporter Minwoo Lee] Kakao, which successfully listed Kakao Games, has chosen Kakao Pay as its next target. Kakao Bank and Kakao Page are also lined up. It is expected that the 'giant' encompassing banking, financial investment, and lifestyle finance will enter the regulated stock market.

According to the industry on the 30th, Kakao Pay recently selected KB Securities as its lead underwriter and applied to the Financial Supervisory Service for auditor designation. Following its consistent announcement of plans to go public in 2021, it has now begun concrete preparations. It is interpreted that Kakao Pay judged this to be the right time after witnessing the successful IPO of Kakao Games. Previously, Kakao Games recorded the largest-ever subscription deposit of 58 trillion won from general investors, achieving great success. Considering the recent growth trend and the symbolic significance of being the first domestic fintech (finance + technology) company to go public, it is expected that Kakao Pay will also succeed in its IPO.

The listing is scheduled for the first half of next year. A Kakao Pay official stated, "We are preparing for the first half of next year," adding, "Since we meet the listing requirements for both the KOSPI and KOSDAQ markets, we plan to discuss with the underwriters and make a final decision."

Kakao Pay is already a leading domestic simple payment company with 34 million subscribers. As of the first half of the year, its transaction volume exceeds 29 trillion won. The annual transaction volume for this year is expected to approach 70 trillion won. It acquired Baro Investment & Securities and launched Kakao Pay Securities in February. The securities deposit account launched at the end of February surpassed 2 million accounts earlier this month. Next year, it plans to launch financial product trading services including domestic and international stocks, bonds, and exchange-traded funds (ETFs). Additionally, it is expanding its scope across finance by promoting the establishment of a digital non-life insurance company.

Kakao holds a 56.1% stake in Kakao Pay as the largest shareholder, followed by Ant Financial, a financial affiliate of China's Alibaba, holding 43.9%. Recently, its corporate value has rapidly increased, approaching 10 trillion won. In June, Nomura Securities valued Kakao Pay at 7.1 trillion won, but Ebest Investment & Securities raised the valuation to 9.76 trillion won as of the 22nd. Sung Jong-hwa, a researcher at Ebest Investment & Securities, explained, "Kakao Pay is growing even more steeply due to the addition of benefits from the novel coronavirus (COVID-19) on top of its existing high growth trend."

Kakao Bank is also considered a promising candidate. On the 22nd, it resolved at its board meeting to proceed with an IPO in the second half of next year and plans to select an underwriter within this year. As of the end of last month, Kakao Bank had 12.94 million customers, with loan and deposit balances of 18.3 trillion won and 22.3 trillion won, respectively. The over-the-counter stock price is in the high 110,000 won range. Applying the number of issued shares (365.09 million shares), the current market capitalization exceeds 40 trillion won. This surpasses the parent company Kakao's market capitalization of 32.1009 trillion won. Simply adding the market capitalizations of Kakao Games (4.1141 trillion won) and Kakao Pay's corporate value exceeds 85 trillion won by a wide margin.

Yoon Eul-jung, a researcher at Shin Young Securities, explained, "Kakao is becoming a fintech giant encompassing the entire financial industry value chain, including payment and remittance (Kakao Pay), internet-only banking (Kakao Bank), financial investment (Kakao Pay Securities), and lifestyle finance (My Document Box, authentication, etc.). Content business growth and financial revenue generation are accelerating, and platform dominance is also expanding."