[Asia Economy Reporter Choi Seoyoon] It was recently revealed that Kakao Pay has stepped in to support over 10 billion KRW to prevent losses for employees holding employee stock ownership.
On the 13th, IT industry insiders reported that Kakao Pay set a deposit pledge with Korea Securities Finance last month and provided collateral funds amounting to 14.55 billion KRW. Kakao Pay explained that this was to address the collateral shortage situation of the employee stock ownership association, ensuring that employees holding employee stock ownership would not suffer disadvantages such as forced sales amid the recent sharp decline in Kakao Pay’s stock price.
Forced sales occur when, due to a stock price drop, an investor fails to pay the settlement amount for stocks purchased on margin (unsettled transactions), prompting the securities company to forcibly sell the stocks to recover the debt and prevent losses.
Employees can borrow funds through Korea Securities Finance when acquiring employee stock ownership. According to loan terms, if the collateral ratio of 80% is not maintained due to a stock price decline, additional collateral must be provided or the loan repaid to resolve the collateral shortage.
Employees who purchased employee stock ownership through loans inevitably face greater burdens from stock price declines. If the collateral shortage is not resolved, after one year from Kakao Pay’s listing, when the "lock-up" period ends on the 3rd of the following month, employee stock ownership could be forcibly liquidated through forced sales.
Kakao Pay’s stock price reached its peak at 238,500 KRW per share on November 29 last year, immediately after listing, but has since repeatedly declined, closing at 34,400 KRW on the 13th, down 4.97% from the previous day. This marks the sixth consecutive trading day of hitting new lows since the 5th.
According to the securities issuance performance report disclosed by Kakao Pay on October 28 last year, just before listing, the employee stock ownership association was allocated a total of 3.4 million shares at the public offering price of 90,000 KRW. Based on the 849 employees listed in the securities registration statement, this averages to 4,005 shares per person. The stock valuation per person at the public offering price was 360.45 million KRW, but it shrank to 137.77 million KRW based on the closing price on that day.
Meanwhile, Kakao Bank, another financial subsidiary of Kakao, recently decided to establish a company fund worth 10 billion KRW to support loans for employees who purchased employee stock ownership in response to the risk of forced sales.
Kakao Pay is known to have judged that raising the collateral ratio through the company’s collateral support, rather than direct fund establishment, would reduce the burden on employee stock ownership association members and prevent forced sales.
Within the industry, there are also expectations that Kakao Pay may provide collateral support once again.
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