[Asia Economy Reporter Jang Hyowon] The subscription date for the initial public offering (IPO) of Big Hit Entertainment, the agency of the global group BTS (Bangtan Sonyeondan), is just one day away. Attention is focused on whether Big Hit Entertainment will continue the success of SK Biopharm and Kakao Games.
According to the financial investment industry on the 4th, Big Hit Entertainment's general public subscription will take place on the 5th and 6th. The IPO price of Big Hit Entertainment is 135,000 KRW. In the demand forecast conducted earlier for institutional investors, the competition rate was 1,117.25 to 1, and the IPO price was set at the top of the desired band (105,000 KRW to 135,000 KRW).
In this offering, Big Hit Entertainment will newly issue 7.13 million shares, raising a total of 962.55 billion KRW. Of these, 60%, or 4.278 million shares, will be allocated to institutional investors. Additionally, 20%, or 1.426 million shares, will be preferentially allocated to the employee stock ownership association for Big Hit Entertainment employees.
The shares available to general subscribers amount to 20% of the newly issued shares, which is 1.426 million shares. To be allocated these shares, the general public must go through the underwriting securities firms. Big Hit Entertainment has a total of five underwriting securities firms, but JP Morgan is only for institutional investors and is not related to general investors.
The allocation of Big Hit Entertainment shares for general investors by the four underwriting securities firms is as follows: NH Investment & Securities 648,182 shares (45.6%), Korea Investment & Securities 555,584 shares (39%), Mirae Asset Daewoo 185,195 shares (13%), and Kiwoom Securities 37,039 shares (2.6%).
To participate in the general subscription, accounts must be opened in advance with these securities firms. NH Investment & Securities requires accounts to be opened online by the 4th (today) to participate in the subscription. Korea Investment & Securities allows offline account opening until the 5th and online until the 6th. If you have an account, you can visit the securities firm branch directly or participate online (HTS·MTS) in the subscription.
Since the allocation quantities differ by securities firm, subscription limits per person are set. NH Investment & Securities allocates 12,800 shares to online customers and 25,600 shares to general customers. Korea Investment & Securities and Mirae Asset Daewoo allocate 9,000 shares online and 18,000 shares to general customers, while Kiwoom Securities allocates 2,000 shares online and 3,000 shares to general customers.
NH Investment & Securities offers subscription limits up to 250% for customers holding more than 18 million KRW in long-term pension products. This means a total allocation of 64,000 shares. Korea Investment & Securities allows subscriptions up to 200% of the general customer limit if the account balance exceeds 50 million KRW.
However, it is expected to be difficult for individuals to fully utilize their subscription limits. The allocation of shares in the general public subscription is also determined by the competition rate. If the general competition rate is similar to the institutional demand forecast rate, around 1,000 to 1, a deposit of 67.5 million KRW (50%) is required to receive one share.
If one share experiences a "ttasang," the stock bought at 135,000 KRW would rise to 351,000 KRW, yielding a profit of 216,000 KRW. Investing 67.5 million KRW would result in an expected return of 0.32%. "Ttasang" refers to the stock price on the first day of Big Hit Entertainment's listing starting at twice the IPO price (the opening price range is set between 90% and 200% of the IPO price) and then hitting the upper limit price.
Previously, Kakao Games had a competition rate of 1,524 to 1 in its IPO. If Big Hit Entertainment shows a similar competition rate, more than 100 million KRW in deposit would be required to receive one share.
Meanwhile, BTS's new song "Dynamite" held the number one spot on the US Billboard Hot 100 singles chart for three weeks. They are also scheduled to perform at the 2020 Billboard Music Awards (BBMA) this year.
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