Deflated IPO Market... 'Kabang' Upholds Its Reputation with Record-Breaking Success

Kakao Pay, Krafton and Other Big Names Postpone
'Kabang' Alone Achieves Record-Breaking Success
Institutional Funds of 2,585 Trillion Gather in Demand Forecast, All-Time High

[Asia Economy Reporter Minwoo Lee] Although a record-breaking enthusiasm for IPO investments was expected as major IPO "whales" were set to launch at the end of this month, the atmosphere has somewhat cooled as key companies postponed their schedules. However, the institutional demand forecast for KakaoBank, the most anticipated stock, attracted an unprecedented amount of funds, reigniting the excitement.

According to the financial investment industry on the 23rd, Krafton and KakaoPay, which were considered the major IPO "whales" to debut in the IPO market at the end of this month, will conduct public subscription for general investors only after next month. This is due to the Financial Supervisory Service (FSS) requesting amendments to their securities registration statements. Accordingly, Krafton's general investor subscription schedule, originally planned for mid-this month, has been postponed to July 2-3. Along with this, after submitting a revised securities registration statement on the 1st, the expected price range was lowered by about 10% to 400,000?498,000 KRW. Consequently, the expected market capitalization was reduced to a maximum of 24.35 trillion KRW.

KakaoPay’s schedule has become even more uncertain. It was supposed to finalize the public offering price through institutional investor demand forecasting at the end of this month and accept general subscriptions by early next month at the latest. However, due to the FSS’s request for amendments to the securities registration statement, all schedules are expected to be delayed. The reason lies in the so-called “135-day rule,” which requires companies conducting IPOs to complete listing procedures, including payment, within 135 days from the financial statement preparation date. Since KakaoPay prepared its financial statements based on Q1, it must complete the listing by July 13. However, after receiving the FSS’s amendment request on the 16th, meeting this deadline has become practically difficult. As the securities registration statement must be prepared based on the semiannual results to be announced in mid-next month, the listing is expected to be possible only after September.

KakaoBank is expected to meet investors’ expectations by smoothly proceeding with the IPO process. The demand forecast for domestic and foreign institutional investors, conducted until the 21st, signaled a record-breaking success. The institutional investor competition ratio was 1,733 to 1, ranking second all-time in the KOSPI market, and the amount of funds raised reached 2,585 trillion KRW, surpassing the previous record of 2,417 trillion KRW set by SK IE Technology (IET). All participating institutions offered prices above the upper limit of the expected price range, 39,000 KRW, and the public offering price was finalized at 39,000 KRW. Accordingly, the market capitalization based on the public offering price reached 18.5289 trillion KRW. This ranks third among financial stocks, following KB Financial Group (21.5389 trillion KRW) and Shinhan Financial Group (19.8633 trillion KRW), based on the previous day’s closing price. Considering that the opening price is usually higher than the public offering price, it is only a matter of time before KakaoBank becomes the number one financial stock.

HK Innoen, the manufacturer of the hangover relief drink “Condition,” is also expected to continue the investment enthusiasm in July by proceeding with its IPO as planned. HK Innoen, formerly CJ Healthcare, is currently conducting a demand forecast targeting domestic institutions until the 26th. The expected price range is 50,000?59,000 KRW. If the top price is decided, the expected market capitalization after listing will be up to 1.7054 trillion KRW. The general public subscription will be held on the 29th and 30th.

A financial investment industry official said, “Although the enthusiasm somewhat cooled as KakaoPay and Krafton postponed their schedules, KakaoBank overcame concerns about overvaluation and showed a record-breaking success in institutional investor demand forecasting, reigniting the enthusiasm for public subscription. Starting with Krafton in early next month, major IPO ‘whales’ will appear in the second half of the year, and the enthusiasm for IPO investments will continue.”