Completion of IPO Underwriter Selection
Company Value Barometer is 'Kabang'
Comparison Targets Include Market Position and Loan Balance
[Asia Economy Reporter Park Jihwan] K-Bank, South Korea's first internet-only bank, is drawing market attention to its future corporate valuation as it completes the selection of underwriters for its initial public offering (IPO). While some expect K-Bank's listing valuation to be around 10 trillion won, there are views that it will be difficult to exceed the 6 trillion won range due to the poor stock performance of KakaoBank?a key benchmark?whose share price halved after its listing.
According to the financial investment industry on the 8th, K-Bank selected NH Investment & Securities, Citi Securities, and JP Morgan as lead underwriters for the IPO on the 4th, with Samsung Securities as a co-underwriter. A K-Bank listing underwriter stated, "We aim to proceed with the IPO within this year," adding, "The corporate valuation method considers not only the price-to-book ratio (PBR) like KakaoBank but also monthly active users (MAU) and total number of subscribers."
K-Bank initially targeted a 2023 listing but has accelerated the timing after achieving its first annual profit since its launch last year. K-Bank posted a net profit of 22.4 billion won last year, marking its first profit since inception. This is a dramatic turnaround compared to losses in the 100 billion won range during 2019-2020.
K-Bank's business indicators improved sharply after forming a business partnership with Upbit, the top virtual asset exchange, last year. The number of customers increased from 2.19 million at the end of 2020 to 7.17 million at the end of last year. Deposits surged more than threefold from 3.75 trillion won at the end of 2020 to 11.3 trillion won at the end of 2021. Loan balances also grew 2.4 times from 2.99 trillion won to 7.1 trillion won.
Issuers and underwriters currently mention a post-listing corporate valuation for K-Bank applying a PBR of 6 to 7 times, reaching the 10 trillion won level. The PBR applied to evaluate KakaoBank’s corporate value at its IPO was 7.3 times. As of this date, the estimated market capitalization based on Securities Plus’s unlisted market is maintained at around 7.8144 trillion won.
However, the recent clear downward trend in KakaoBank’s stock price is expected to negatively impact K-Bank’s corporate valuation. KakaoBank’s share price has plummeted 28.2% just this year. As of the previous day, its market capitalization stood at 20.123 trillion won, with the PBR falling from about 5.0 times at the end of last year to 3.6 times currently.
Choi Namgon, a researcher at Yuanta Securities, said, "K-Bank’s market capitalization after listing is inevitably compared to KakaoBank. If we simply apply KakaoBank’s current PBR level of around 4 times, K-Bank’s value is expected to be about 6.5 trillion won," adding, "The 10 trillion won valuation currently circulating in the market seems difficult."
Analysis suggests that K-Bank cannot receive a higher valuation as it is still inferior to KakaoBank in market position. Although K-Bank’s business indicators are clearly improving, there is a large gap compared to KakaoBank’s figures at the time of its listing: 16.5 million customers, and deposit and loan balances of about 25 trillion won and 22 trillion won, respectively. The high dependence on the virtual asset exchange Upbit also raises concerns about business stability, making it difficult to assure investors and potentially hindering corporate valuation. The financial investment industry consensus is that K-Bank’s rapid growth in scale was largely due to the exclusive partnership with Upbit, which brought in many customers and deposits. An asset management industry official said, "There is a significant difference between K-Bank and KakaoBank as financial platforms in terms of active accounts, deposit and loan scale, and profit differences," adding, "K-Bank’s value cannot be higher than KakaoBank’s, so the IPO valuation will be greatly influenced by KakaoBank’s stock price at that time."
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