[Funding] Giantstep to Conduct 70 Billion KRW Paid-in Capital Increase Six Months After IPO

[Asia Economy Reporter Hyunseok Yoo] Giantstep is raising 70 billion KRW in funds. This is an unusual fundraising occurring less than a year after its initial public offering (IPO).

According to the Financial Supervisory Service's electronic disclosure system on the 5th, Giantstep is conducting a rights offering with shareholders allocated 0.1214791370 new shares per existing share. The planned issue price is 55,500 KRW, and 1,261,262 new shares will be issued. The issue price will be finalized in December.

Founded in 2008, Giantstep is a specialized company in advertising and video VFX (visual effects) and real-time content solutions. Its sales in the first half of this year were 13.7 billion KRW, a 63.84% increase compared to the same period last year. However, it continued to post an operating loss of 1.9 billion KRW.

The company plans to use the funds raised through the rights offering over three years until 2024. First, 15 billion KRW will be invested in research and development (R&D) and labor costs, and another 15 billion KRW will be allocated to expanding virtual production infrastructure. Additionally, 40 billion KRW will be used to acquire securities of other companies to expand new metaverse-related businesses.

It is considered unusual in the financial investment industry for a company listed on the KOSDAQ market in March to raise additional funds within six months. An industry insider explained, "During the IPO preparation process, detailed future fund usage plans must be established," adding, "There will likely be a need to persuade regulatory authorities and shareholders to understand the reasons for raising a large amount of funds within six months."

At the time of the IPO, Giantstep announced plans to use the raised funds over three years until 2023. At that time, it raised 15.4 billion KRW. The secured funds were planned to be allocated as 2.6 billion KRW for facility funds, 1 billion KRW for operating funds, 6.3 billion KRW for acquiring other companies, and 5.3 billion KRW for R&D.

Although the three-year funding plan was recently established, Giantstep has now set a new plan for large-scale capital investment to support growth. Moreover, since 40 billion KRW has been allocated for mergers and acquisitions (M&A), shareholders' curiosity is growing. As interest in the metaverse increases, the corporate value of unlisted or listed companies with related technologies has rapidly risen. Hasty acquisition decisions could instead hinder growth.

Participation of CEO Ha Seungbong, the largest shareholder with an 18.64% stake, in this rights offering has not yet been confirmed. The company explained in the securities registration statement, "CEO Ha Seungbong is considering participating to the maximum extent possible within his financial capacity," but added, "Nothing has been finalized at this time."

Meanwhile, Giantstep will also conduct a bonus issue alongside the rights offering. Through the bonus issue, 10,917,027 shares will be issued, with one new share allocated per existing share. The new shares are scheduled to be listed on January 7 of next year.