General Subscription 'KakaoPay', Diverging Stock Price Outlook

[Asia Economy Reporter Junho Hwang] As KakaoPay's public offering subscription for the general public is set to begin on the 25th, opinions on KakaoPay's future stock price outlook are divided.

According to the financial investment industry on the 24th, KakaoPay, which will be listed on the KOSPI market on the 3rd of next month, will accept subscriptions from general investors over two days, the 25th and 26th.

25% of the total public offering volume, or 4.25 million shares, will be allocated to general subscribers. Notably, for the first time in domestic IPO history, 100% of the public offering shares allocated to general subscribers will be distributed equally. By subscribing to the minimum unit of 20 shares (with a deposit of 900,000 KRW), everyone can receive the same number of shares. For example, if 425,000 people participate, each will receive 10 shares; if 4.25 million participate, each will receive 1 share.

Since the prior demand forecast was successful, it is highly likely that the general subscription will follow this positive trend. Among domestic and overseas institutions participating in the demand forecast, the ratio of lock-up agreements ranging from a minimum of 1 month to a maximum of 6 months was 70.4%, the highest figure recorded among companies that raised over 1 trillion KRW through IPOs since 2014. The employee stock ownership association subscription rate also exceeded 100%.

However, from the perspective of general investors, the stock price is crucial, and the outlook is divided. On the 19th, Jin-gu Kim, a researcher at KTB Investment & Securities, stated in a report that KakaoPay's appropriate corporate value was revised from the previous 12.6 trillion KRW to 7.4 trillion KRW, suggesting a fair stock price of 57,000 KRW. This implies that the current public offering price is overvalued.

Currently, Alipay, the second-largest shareholder of KakaoPay, may proceed with disposing of its shares. Of the 45% stake held by Alipay, 28.47% (37,120,755 shares) will be freely tradable immediately after listing. Adding the public offering volume of 13.6 million shares (10.44%), the volume available for trading immediately after listing will reach 38.91%.

On the other hand, Meritz Securities valued KakaoPay at 14.4 trillion KRW and suggested a fair stock price of 110,000 KRW. Researcher Donghee Kim predicted, "Considering KakaoPay's high user loyalty, the network effect of KakaoTalk, and the potential for promising fintech M&A through the public offering funds, KakaoPay's competitiveness as a leading domestic fintech platform will be further strengthened."