Internet-only K Bank to raise $1.05 bn in rights offering

South Korea’s first internet-only bank, K Bank, will be raising 1.2 trillion won ($1.05 billion) from existing and new investors for business expansion and diversification. K Bank was launched in 2016 by the country’s major telecom company KT Corp. and began operations in 2017.

According to investment banking sources on May 20, the bank is in its final stages of raising 1.2 trillion won ($1.05 billion). The funding will increase its capital to 2.1 trillion won ($1.86 billion), closely behind internet bank leader KakaoBank with an aggregate capital of 2.38 trillion won ($2.1 billion).  

The list of new investors includes Bain Capital, MBK Partners, Shinhan Alternative Investment Management-JS PE and MG Korean Federation of Community Credit Cooperatives (KFCC). Sources report that Bain will put in 200 billion won ($177 million); MBK 200 billion won ($177 million); Shinhan-JS 100 billion won ($89 million); while KFCC will invest 100 billion won ($89 million).

Among the bank’s existing shareholders, the largest shareholder BC Card will invest 400 billion won ($354 million), whereas other minority shareholders, including Hanwha Life Insurance Co., will invest a total of 100 billion won ($89 million).  

K Bank says that the investment positions it well to diversify into new business areas and overtake KakaoBank’s leadership. K Bank’s entry last year to the cryptocurrency segment by forming a partnership with the cryptocurrency exchange Upbit proved to be a big profit generator.

Thanks to the nationwide craze over cryptocurrency investment, K Bank opened more than 1.72 million new accounts in the first quarter of this year, significantly reducing its net loss from 35 billion ($31 million) in the fourth quarter of 2020 to 12.3 billion won ($11 million).  

K Bank is targeting an IPO in the local stock market by 2023. The bank says that this fundraising round has succeeded in attracting new investments from global big names such as Bain Capital largely due to the inclusion of protection clauses in the agreement deal.

Sources say that the global investors are protected by drag-along rights, which allow them to sell their stakes to largest shareholder BC Card through call options, should K Bank fail to list by 2023.

Write to Chae-yeon Kim at why29@hankyung.com
Daniel Cho edited this article.