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IPOs

Kakao Bank applies for preliminary review of 2021 IPO

By Apr 15, 2021 (Gmt+09:00)

Kakao Bank applies for preliminary review of 2021 IPO
Kakao Bank, South Korea's No.1 mobile banking app., has kicked off the process to go public by applying for a preliminary review of its stock market listing on Apr. 15, according to investment banking sources.

The initial public offering, expected to take place in July at its earliest, is likely to value the startup at 20 trillion won ($18 billion), more than twice as much as the 9.3 trillion won estimated when it raised 1 trillion won in a rights offering last December.

In over-the-counter stock markets, its enterprise value already reached 30 trillion won, far outpacing KB Financial Group's 22 trillion won and Shinhan Financial Group's 19 trillion won, the country's two largest banking groups.

Given the typical 45 business days the Korea Exchange takes to review a preliminary IPO application, Kakao Bank is expected to win preliminary approval in June. Then it will proceed with filing detailed documents and conducting bookbuilding and public subscription.

In what is set to become the country's first Internet-only bank listed on the Korea Exchange, its stock market debut will likely be made in July at its earliest. Upon receiving preliminary approval from the exchanges, the company needs to go ahead with the IPO within six months.

Its IPO will pave the way for the existing shareholders' exit from the banking platform. After the largest shareholder Kakao Corp with a 31.78% stake, Korea Value Asset Management Co. is the second-largest shareholder with a 27.1% stake as of the end of last year and Korea Investment Holdings holds another 4.67%.

Other shareholders include Kookmin Bank with 9.35%; TPG with 2.6% and Anchor Equity Partners with 2.6%. Seoul Guarantee Insurance Company, Korea Post, eBay Korea and Tencent hold a 3.74% stake in Kakao Bank, respectively.

Its 2020 net profit soared eightfold to 113.6 billion won from a year earlier. During the same period, its operating profit and revenue spiked by over ninefold and 21% to 122.6 billion won and 804.2 billion won, respectively.

The rosy growth prospects of internet banks and fintech apps may justify its hefty valuation, supported by ultra-low interest rates, ample market liquidity and recent frenzies about IPO stocks. In OTC stock markets, the banking app had been the top pick of those in their 20s over the past year, ahead of its planned 2021 IPO. In the first three months of the year, however, it had declined amid valuation concerns.

Since its inception in July 2017, Kakao Bank has solidified its No.1 position among internet-only banks at home. It boasts of 13.6 million subscribers in the country of 51 million population as of the end of 2020. 

It has gained a market share with its messaging app-based products, including a joint account for a club that its club members can jointly manage through their chatroom, a teenagers-targeting Kakao Bank Mini and a 26-week savings product for which the subscriber increases savings incrementally on a weekly basis during the 26 weeks.  

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

Yeonhee Kim edited this article.

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