Naver enlists Goldman Sachs, Morgan Stanley for US IPO of webtoon unit

South Korea’s leading online platform operator Naver Corp. plans to list shares of Los Angeles-based affiliate Webtoon Entertainment Inc. on the US stock market as early as June.

Webtoon Entertainment, which oversees Naver’s Korean and global digital comics business, recently hired Goldman Sachs and Morgan Stanely as lead managers for its planned US initial public offering, industry sources said on Monday.

Webtoon Entertainment is the parent of Seoul-based Naver Webtoon Ltd., the world’s top digital comics provider. Webtoon Entertainment’s other subsidiaries include LINE Digital Frontier Corp. in Japan and webtoon and web novel producers in Canada – Wattpad Webtoon Studios and Wattpad Corp.

Naver Corp. is the largest shareholder of Webtoon Entertainment with a 71.2% stake.

Sources said Webtoon Entertainment is seeking to raise as much as $500 million at a valuation of $3 billion to $4 billion.

It is targeting an IPO timeframe of as early as June and could invite more underwriters apart from the two investment banks, according to a Bloomberg News report.

However, the timing ultimately hinges on market conditions, people familiar with the matter said.

Naver has considered listing the business since 2021, around the time the novel medium began to catch on in major markets, including the US.

During a second-quarter earnings conference call with analysts in 2023, Naver presented Webtoon Entertainment’s business turnaround as a precondition for its US market debut.

Industry officials said conditions have been met as Naver Webtoon, Webtoon Entertainment’s flagship unit, posted positive 2023 EBITDA, or earnings before interest, taxes, depreciation and amortization.

The US IPO, if successful, would mark the first time for a Naver affiliate to go public since its Japanese subsidiary LINE Corp.’s dual listing in Japan and the US in August 2016.

LINE is now delisted, however, after it was merged with Z Holdings, the parent of Yahoo Japan, in December 2020.

GLOBAL EXPANSION

In December, Webtoon Entertainment appointed David J. Lee, a consumer and tech industry expert, as its chief financial officer and chief operating officer as the company was seeking expansion in the US market.

As part of its global expansion, Naver Webtoon plans to adapt popular content into films or drama series.

Netflix Inc., the world’s No. 1 streaming platform, is scheduled to release “The 8 Show” this year based on the popular Korean digital comics "Money Game" and "Pie Game," which were serialized on Naver Webtoon from 2018 to 2021.

The Netflix series is expected to become another box-office hit, with its content similar to "Squid Game," Netflix’s biggest show ever, industry officials said.

In Japan, LINE’s Line Manga is the No. 1 digital comics platform, providing digital versions of cartoons published in paper books.

Write to Seok-Cheol Choi at dolsoi@hankyung.com

In-Soo Nam edited this article.