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Korea’s No. 1 chicken franchise raises $8.2bn in subscriptions

Nov 04, 2020 (Gmt+09:00)

South Korea’s No. 1 fried chicken franchise operator Kyochon F&B pulled in a staggering $8.2 billion in deposits during its two-day public subscription Nov. 3 and 4.

The company's shares were oversubscribed by 1,318 times with a demand for over 1.5 billion shares, although the company had allocated 1.16 million, or 20%, of the shares for retail investors.

Securities firms say that the affordable price set for its offering shares contributed to the strong subscription. Initially, Kyochon was expected to set a target price around 20,000 won ($18), but settled on a range between 10,600 won and 12,300 won ($9-11) given the lower growth potential of the franchise sector growth compared to that of IT or bio companies.

As a result, the company's bookbuilding was successful, with bids outnumbering offers 999 to 1, setting the final offering price at 12,300 won.

Kyochon's popular fried chicken

Retail investors were also drawn to Kyochon's subscription as there was less likelihood of large blocks of shares spilling into the market or a stock overhang upon its listing.

The total number of shares that can be traded upon Kyochon's trading debut is around 4.66 million shares, or 18.5% of the company’s total shares. The relatively modest portion is owing to the company’s founder holding a whopping 72.5% of the shares that are subject to lockup until six months after listing.

This may have been favorable for investors given that Big Hit Entertainment Co., the label behind global pop sensation BTS, saw large share blocks being sold off by financial investors upon its listing, which had a negative impact on the share price.

The company's solid position as the country's leading fried chicken brand may have been helpful as its brand is widely recognized by the public.

Kyochon is set to make its trading debut on Nov. 12 as the country’s first franchise to list on the Seoul bourse.

Last year, Kyochon posted around 380 billion won ($334 million) in revenue, a 12% year-on-year increase. Its operating profit also jumped from 20.3 billion won to 39.3 billion won, up 93% during the same period. 


Write to Jong-woo Kim and Ye-jin Jun at jongwoo@hankyung.com

Danbee Lee edited this article.

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