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Korea’s biggest fried chicken brand aims to raise up to $61 mn in Nov. IPO

Oct 05, 2020 (Gmt+09:00)

Kyochon F&B, South Korea’s No. 1 fried chicken franchise operator, plans to raise up to 71.3 billion won ($61 million) in an initial public offering next month, according to its regulatory filing on Oct. 5. It is set to become the country’s first franchise to list on the Seoul bourse.

It will float 5.8 million shares and price them between 10,600 won and 12,300 won apiece. The company submitted a securities registration statement, including detailed IPO plans, to the regulatory Financial Supervisory Service on Monday.

Based on the indicative price range, its market value is estimated to be as high as 330 billion won, more than 10 times its 2019 earnings, after the planned stock market debut.

Mirae Asset Daewoo is underwriting the IPO for which the bookbuilding is due for Oct. 28-29.

Last year, Kyochon’s operating profit nearly doubled to 39.4 billion won on revenue of 380.1 billion won on a consolidated basis. Its delivery business posted hefty growth in the first half of this year, following the coronavirus outbreak

It runs about 1,000 franchise outlets across the country. The outlets' revenue averaged 618 million won in 2018, the highest among fried chicken chains registered with the country’s Fair Trade Commission.

“After its stock market listing, Kyochon, as South Korea’s No.1 fried chicken franchise, will prove its potential by expanding into overseas markets,” a Mirae Asset Daewoo source told The Korean Investors.

It has lowered its IPO fundraising target, however, reflecting increased stock market volatility and investors’ recent switch to large-cap stocks.

This is Kyochon's second attempt to go public. Its previous IPO plan, announced in March 2018, was withdrawn when the company came under fire after a video clip capturing its owner family member's assault on an employee surfaced in the same year.

Its founder and ex-chairman Kwon Won-kang stepped down last year. He holds 96.8% of Kyochon F&B.

Separately, two Seoul-based private equity firms -- Q Capital Partners and Corstone Capital – jointly acquired smaller fried chicken brand Yellow Chicken for around 70 billion won last month.

The acquisition followed Q Capital’s investment of 60 billion won to buy a 30% stake in another Korean fried chicken franchise BBQ Chicken last year.

Write to Ye-jin Jun and Jong-Pil Park at ace@hankyung.com

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