Kakao Pay must refile IPO registration statement to FSS

South Korea’s financial regulator Financial Supervisory Service (FSS) on July 16 requested correction of Kakao Pay’s IPO registration statement, submitted earlier this month on July 2.

The Article 122 of the country’s Financial Investment Services and Capital Markets Act, titled “Corrective Registration Statement”, grants FSS the right to demand revision of the submitted filings if there are factual omissions or unclear descriptions.

Investment banking sources said that the regulator’s decision to demand Kakao Pay’s correction is likely to root from its intention to address the issue of possible overvaluation. They highlighted that some of the biggest IPOs planned later this year, such as those of SD Biosensor Inc. and Krafton Inc., ended up lowering their offering prices significantly after the intervention by FSS.

FSS’s main rationale behind such intervention is that the omissions or unclear logic in calculating the company’s valuation may hinder investors from making rational decisions. According to Kakao Pay’s registration filings, the company valued itself around 8.2 trillion-12.5 trillion won ($7.2 billion-10.9 billion), based on overseas benchmark cases such as PayPal Inc. and Square Inc.

In order to properly address the regulator’s request, Kakao Pay may have to postpone its IPO subscription that is currently scheduled to open on Aug. 4. The analysts also added that Kakao Pay’s offering price may also be cut like those of SD Biosensor and Krafton.

Write to Jin-seong Kim at jskim1028@hankyung.com
Daniel Cho edited this article.