Credit Suisse takes one-fifth of S.Korea's Aug IPO fees

Credit Suisse (CS) is taking one-fifth of the underwriting fees from South Korea's four big initial public offerings this month, including KakaoBank Corp. and Krafton Inc. 

The four IPOs, which encompass a pharmaceutical company HK inno.N Corp. and Lotte Rental Co., will generate a combined 55 billion won ($50 million) in underwriting fees before incentives, according to calculations by Market Insight on Aug. 9. Market Insight is the capital news outlet of The Korea Economic Daily.

Krafton and KakaoBank account for the vast bulk of the fees at 21.5 trillion won and 20.4 trillion won, respectively.

Of the total, CS is receiving 11.1 billion won ($10 million) as co-underwriters of KakaoBank, the country's internet-only bank and Krafton, the developer of the popular online game PlayerUnknown’s Battlegrounds (PUBG).

After working on the two blockbuster IPOs, CS rose to the top of the country's IPO underwriters league table for August.

KakaoBank made a strong debut on Kospi last Friday to become the country's most valuable lender. In contrast, Krafton, which marked the country's second-largest IPO since Samsung Life Insurance Co.'s offering in 2010, declined on its first trading day on Tuesday.

	Underwriter	IPO fee income before incentives
1	Credit Suisse	11.1 billion won
2	Korea Investment & Securities	8.3 billion won
3	Citigroup Global Markets Securities	7.3 billion won
4	KB Securities	6.8 billion won
5	JPMorgan	5.9 billion won
6	Mirae Asset Securities	5.5 billion won
7	NH Investment & Securities	4.9 billion won
Note: Combined fees from four August IPOs: KakaoBank, Krafton, HK inno.N and Lotte Rental

Combined with incentive fees estimated at 33 billion won from the four IPOs, the sum of their underwriting fees will likely increase to 88 billion won. That is about three times the amount of fee income a top Korean brokerage company earns from IPOs a year.

Including the incentive, CS is likely to receive more than 15 billion won in fees from Korean IPOs this month.

Krafton will pay a total of 43.1 billion won to its IPO underwriters, marking the second-largest amount of IPO fees paid by a Korean company, despite setting the fee rate at 0.5%, the lowest among August IPOs in the country. KakaoBank is paying 28.1 bn won to its IPO managers in aggregate.

In comparison, Samsung Life's 2010 IPO generated 48.8 billion won in underwriting fees.

A handful of other high-profile IPOs are queuing up for their stock market debuts in the coming months.

"LG Energy Solution, Kakao Pay and Hyundai Heavy Industries are set to go public later this year. Brokerage companies will likely make their largest-ever underwriting fees from Korean IPOs," said an investment banking source.

Write to Ye-jin Jun at ace@hankyung.com
Yeonhee Kim edited this article.