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Kakao Pay values itself at above-consensus $14 bn

By Apr 27, 2021 (Gmt+09:00)

Kakao Pay values itself at above-consensus  bn

Kakao Pay Corp., aiming to list on South Korea's main stock exchange this year, has valued itself at as much as 16 trillion won ($14.4 billion), or 60% higher than the market consensus of 10 trillion won, according to brokerage industry sources on Apr. 27.

The Korean mobile fintech platform had mistakenly revealed its proposed price band for an initial public offering when it submitted an IPO application on Monday. The numbers, embedded in the preliminary documents, are now removed at the request of the IPO underwriters.

Generally, the price range is made public when an IPO candidate submits a formal document after winning preliminary approval from the stock exchange.

According to the brief disclosure, Kakao Pay is seeking to price its shares between 73,700 won and 96,300 won to raise a total of 1.5 trillion-1.9 trillion won. The suggested price will value its 133 million shares to be listed at 9.8 trillion-12.8 trillion won.

If its shares are priced at the top end of the range, it will become the 30th largest stock on the Kospi in terms of market capitalization, beating HMM Co., a shipping company.

Given that an IPO valuation is calculated by applying the conventional discount rate of 20-40% to a projected corporate value, Kakao Pay's enterprise value would be in the 16 trillion won range, a 27-fold surge from its 600 billion won valuation in 2017 when it spun off from Kakao Corp., the country's dominant mobile messaging app. Kakao Corp. is the biggest shareholder with a 43.9% stake in the fintech platform.

The higher-than-expected valuation surprised many analysts who had estimated Kakao Pay' enterprise value at 10 trillion won ($9 billion), or one-tenth of its projected 2021 annual transaction value of 100 trillion won.

"Even considering its rapid growth rate and market expectations that it would reach a break-even point this year, we had not expected it would propose over 15 trillion won as its corporate value," one of the brokerage industry sources told Market Insight, the capital news arm of The Korea Economic Daily.

Some market observers said the mistaken release of the proposed IPO price band laid bare Kakao Pay's ambition and could be intentional to sound out investors.

In comparison, its affiliate Kakao Bank expects its IPO, which will likely take place in July at its earliest, to value the country's largest mobile banking app at 20 trillion won

Kakao Corp. is the sixth-largest stock on the Kospi with a market capitalization of 54 trillion won as of Tuesday's market close. Kakao Games Corp., which went public last year on the Kosdaq market for smaller caps, is valued at 4.1 trillion won.

Write to Ye-Jin Jun at

Yeonhee Kim edited this article.

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