[IPO Spotlight] ‘E-book Subscription’ Millieoseoje, Will IPO Sail Smoothly Amid Platform Crisis?

Monthly Subscription eBook Service No.1
Content Expansion with Audio and Chatbooks
Subscriber Growth through KT Acquisition Synergy
2 Million Shares Public Offering as Performance Weapon

[Asia Economy Reporter Kwangho Lee] ‘Millie’s Library,’ an electronic reading platform company affiliated with the KT Group, is set to officially begin its public offering (IPO) schedule next month. It has attracted attention by taking on the challenge amid a frozen investment sentiment toward platform companies. The company is aiming for a listing using the special exemption method for unprofitable companies (Tesla requirements). It is being watched to see if it will mark the IPO finale at the end of this year.

Millie’s Library was established in 2016 as a reading platform company. It gained recognition by launching the country’s first subscription-based e-book service. It strengthened its market dominance by promoting its monthly unlimited e-book service, famous for the slogan “Get unlimitedly close to reading.” It boasts the number one position in the domestic monthly unlimited e-book service sector.

Currently, it holds about 120,000 e-books. While steadily increasing its e-book collection, it has also added audiobooks, audio dramas, and chat books (chat-based reading content). It expanded its content area centered on books. Then, in September last year, it was acquired by Genie Music, a subsidiary of KT’s music service, and incorporated into the KT Group. The governance structure follows the order ‘KT → KT Studio Genie → Genie Music → Millie’s Library.’

Millie’s Library has grown steadily by continuously receiving external funding since its seed investment in 2016. In 2017, it secured venture capital (VC) allies starting with HB Investment. In 2018, KB Investment executed investment funds. In 2019, it received investment from Korea Investment Partners. Other prominent financial investors (FIs) such as Kolon Investment and Stick Ventures also participated.

These FIs partially exited by selling some shares when KT acquired Millie’s Library last year. According to the securities registration statement submitted by Millie’s Library, VCs currently hold 24.29% of Millie’s Library’s shares. These include ▲HB Investment (HB Promising Service Industry Investment Association 8.50% · HB Youth Startup Investment Association 3.72%) ▲KB Investment (KB KONEX Activation Investment Association 4.96%) ▲Kolon Investment (Kolon 2015 K-ICT Digital Content Investment Association 3.82%) ▲Stick Ventures (Stick 4th Industrial Revolution Fund 3.29%).

The success of Millie’s Library’s IPO will determine the performance record of these VCs. The investment industry is paying close attention to Millie’s Library’s moves. Not only the VCs invested in Millie’s Library but the entire industry is focused on it. This is because Millie’s Library has thrown down the gauntlet to proceed with its IPO while many platform companies have been postponing theirs due to recent valuation adjustments.

Millie’s Library relies on its performance as a weapon. Although it recorded operating losses until last year, it posted a profit for the first time in the first half of this year. It recorded sales of 21.1 billion KRW and an operating profit of 1 billion KRW in the first half. The securities registration statement also includes third-quarter results. Although the financial statements have not yet been audited or reviewed, the operating profit exceeded the cumulative figure for the first half. Third-quarter sales were 12.4 billion KRW, with an operating profit of 1.9 billion KRW.

The increase in subscribers due to synergy effects with KT Group affiliates is also notable. In February, Millie’s Library signed a service supply contract with KT and launched products combining plans and subscriptions. The cumulative number of members, which was 4.18 million at the end of last year, increased to 5.47 million as of August, and the number of subscribers rose from 390,000 to 910,000 during the same period.

Previously, Millie’s Library planned to proceed with the public offering schedule at the end of October but postponed it to November. Although there were various speculations at the time, it is interpreted as a strategic step back to present these positive figures. The demand forecast dates are November 4?5, subscription dates November 10?11, and payment date November 15, slightly changed from the originally announced schedule.

The total number of shares to be offered is 2 million, with a desired offering price of 21,500 KRW to 25,000 KRW per share. The total expected offering amount is 43 billion to 50 billion KRW. Based on the offering price, Millie’s Library’s market capitalization is expected to be between 186 billion and 216.3 billion KRW. To meet the desired offering price band, market expectations for profitability must be satisfied. Despite the recent return to profitability, concerns about the business model and IPO success remain.

The fact that major platform companies have consecutively postponed their listings is also an unsettling factor. The native app store One Store withdrew its listing after the demand forecast due to poor performance. Socar lowered its offering price below the desired range during the public offering process, yet its stock price after listing was 33% lower than the offering price. Large platform companies such as dawn delivery company Kurly and internet bank K Bank have yet to finalize their listing schedules.

A platform-specialized investment analyst said, “Platform company IPOs have become much more difficult,” adding, “There is no guarantee of good results even if the IPO is postponed to wait for a better time.” He further noted, “FIs cannot just keep waiting indefinitely.”