Regulatory moves delay Kakao Group’s IPO plans

Toughening regulations on big tech firms in South Korea are impacting the IPO timeline of Kakao Pay Corp. and Kakao Mobility Corp.

According to the investment banking industry on Sept. 14, Kakao Pay held a meeting with the financial regulator Financial Supervisory Service (FSS) to discuss its listing schedule and the scope of changes to be made on its stock registration filing. The IPO demand forecast among the institutional investors, which was planned to be held over Sept. 29-30, will be delayed accordingly.

The meeting was held following the financial regulators’ recent ban on brokerage services of fintech companies. The Financial Services Commission (FSC) and FSS on Sept. 7 ruled that financial product recommendation services offered by the platforms such as Naver Financial Corp., Kakao Pay and Toss, violated the new Act on The Protection of Financial Consumers enacted in March this year.

After the ruling, Kakao Pay announced to halt the services in question. The company will resubmit its stock registration documents with updated growth projections and revenue forecasts. The filing will also newly take regulations and other risk factors into account in its business plans.

Sources said that Kakao Pay is also considering the option to further cut its IPO price band, which has been already lowered to 60,000-90,000 won ($51.23-$76.84) in July from the original proposal of 63,000-96,000 won ($53.79-$81.96).

Kakao Pay’s revision of its stock registration filing will postpone its IPO to November from the initial target of October. As the new filing will take effect after 15 working days from the date of submission, Kakao Pay’s subscription period will be around mid-October.

Another group affiliate Kakao Mobility’s IPO will be conducted later than the original plans as well. The company was going to call for requests for proposal (RFPs) by Sept. 10 to select the IPO underwriter, but delayed the submission date to Sept. 17. The mobility company initially aimed to select the underwriter by October but postponement now seems unavoidable.

Analysts note that Kakao Mobility’s decision to delay the IPO timeline has largely to do with the antitrust body Fair Trade Commission’s ongoing investigation on the company regarding unfair practices and its recent announcement to abolish the controversial Smart Call service, which charges extra fees for calling the taxis faster.

Write to Ye-jin Jun at ace@hankyung.com
Daniel Cho edited this article.