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Kakao Games

Kakao Games raises whopping $49.3 bn in subscriptions fueling IPO hype

By Sep 02, 2020 (Gmt+09:00)

2 Min read

Kakao Games Corp. has set a fresh record raising over 58.6 trillion won ($49.3 billion) in deposits during its two-day public subscription on September 1 and 2, according to the investment banking industry. This beats out the previous record of 31 trillion won raised by SK Biopharmaceuticals Co. earlier in June.

The company's shares were oversubscribed by 1,525 times, reaching an all-time high. An investor will be issued a single share for 18.3 million won in deposits.

Kakao Games’ public offering has been eagerly anticipated since August when the company saw bids outnumbering offers by 1,479 to 1 during the bookbuilding for institutional investors. On September 1, the company raised over a staggering 16 trillion won in deposits during the first day of public subscription.

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The overwhelming demand may stem from millennial investors' increased appetite for new investments after taking gains from the recent stock market rally. Also, SK Biopharm was likely an attractive reference point given that the company’s July offering price of 48,000 won has almost quadrupled since then, with the share price closing at 181,500 won on Sept. 2.

Investors are hoping that Kakao Games will become the next SK Biopharm. The company’s offering price of 24,000 won is expected to surge upon listing, riding on the recent BBIG (bio, battery, internet, game) wave wherein non-contact, non-face-to-face sectors perform bullish amid the global pandemic. Securities firms including Daishin Securities have proposed a share price of 33,000 won.

Kakao Games is a household name among millennials, which presumably prompted their participation since the game sector is more user-friendly and understandable than the bio sector.

Industry experts predict the public offering share price hype to continue for some time given abundant liquidity in the market; with securities firms' cash management account balance exceeding 60 trillion won for the first time ever. Also, IPO shares are safer than regular stocks because the share price seldom dips below the offering price once it is listed -- making them all the more attractive.

“Investors’ craze over public offering shares is not expected to dissipate anytime soon given upcoming IPO blockbusters such as Big Hit Entertainment,” said a source from Korea Investment & Securities.

The IPO market in South Korea has flourished with newly listed companies posting an average 55.6 percent hike from their offering price during the first half of the year, the Korean Investors reported earlier.

Kakao Games is planning to raise 384 billion won via the initial public offering. The company will issue 16 million shares to both institutional and retail investors. The company’s enterprise value is projected at 1.76 trillion won based on the proposed IPO price.

Write to Ye-jin Jun at ace@hankyung.com

Danbee Lee edited this article

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