'Baeg' Krafton IPO Launch...Will It Become the Leading Game Stock?

[Asia Economy Reporter Koh Hyung-kwang] Krafton, the owner of the global gaming hit 'Battlegrounds,' has officially launched its initial public offering (IPO). With projections that the company's value could reach up to 30 trillion won, it is highly likely that Krafton will surpass NCSoft to become the leading game stock upon listing.

According to the financial investment industry on the 1st, Krafton selected Mirae Asset Daewoo as the lead underwriter for its IPO on the 27th of last month. Credit Suisse Securities, Citigroup Global Markets Securities, J.P. Morgan Securities, and NH Investment & Securities were included as joint underwriters.

Krafton was founded in 2007 by Chairman Jang Byung-gyu, who also established Neowiz and served as the chairman of the 4th Industrial Revolution Committee under the current government. Chairman Jang, the largest shareholder, holds a 17.4% stake. The company began significant growth after acquiring PUBG in 2015.

By the end of last year, Battlegrounds sales for PC and consoles exceeded 55 million copies, and mobile downloads surpassed 600 million. Krafton's operating profit, which was 26.6 billion won in 2017, increased more than 13 times to 359.3 billion won last year. Additionally, due to the surge in game users amid the COVID-19 pandemic this year, the company recorded an operating profit of 513.7 billion won in the first half (January to June), making it highly likely to surpass 1 trillion won in annual operating profit.

The market estimates that Krafton's market capitalization could reach up to 30 trillion won upon listing. Considering that NCSoft, currently the leading game stock in Korea, has a market capitalization of about 17 trillion won, Krafton's scale would be nearly twice as large.

Krafton has been preparing for the IPO through organizational and corporate restructuring. In June, it launched the Kim Chang-han CEO system and merged PUBG Corporation, the developer of Battlegrounds, which is considered Krafton's flagship title. The independent studio Bluehole Studio was established as a spin-off company responsible for developing new RPG games such as TERA and Elyon.

Industry insiders expect that Krafton will proceed with the listing by the first quarter of next year at the earliest, or by the first half of next year at the latest, now that it has initiated the IPO process. Krafton stated, "Our goal is to go public on the domestic securities market next year," adding, "We plan to accelerate preparations following the selection of underwriters."