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IPOs

K-pop fan engagement platform DearU begins process for Nov IPO

Plans bookbuilding Oct. 25-26; retail subscription Nov. 1-2 to raise up to $66.9 million

By Sep 30, 2021 (Gmt+09:00)

JYP Entertainment's TWICE
JYP Entertainment's TWICE

How much will you pay to chat with your favorite K-pop groups such as TWICE every day? A South Korean startup generated 20 billion won ($16.9 million) in revenue in the first half of 2021 through a messaging service that allows users to talk to celebrities in the country paying only $3.8 per month.

DearU Co., a startup backed by South Korea’s music powerhouses SM Entertainment Co. and JYP Entertainment Inc., is seeking an initial public offering (IPO) in November with its corporate value estimated at up to 530 billion won, about half that of major entertainment companies’ market capitalizations.

K-pop’s growing popularity around the globe has upped the value of companies that generate profit from fandom business, analysts said.

DearU has begun the process for a Kosdaq listing by submitting a registration statement on Sept. 28. It aims to sell 3.3 million shares between 18,000 won and 24,000 won apiece to raise up to 79.2 billion won ($66.9 million). Its market capitalization can go up to 528 billion won based on the indicative price range.

The company plans to use the proceeds to secure intellectual property (IP) rights for global artists and develop new businesses such as the metaverse.

Its bookbuilding is scheduled for Oct. 25-26 to decide the IPO price, followed by retail subscription Nov. 1-2.

The company attracted K-pop fans with a paid service "bubble," a global messenger platform for communication between fans and K-pop groups. Users can exchange messages with artists anytime for a monthly subscription fee of 4,500 won ($3.8). An artist talks to multiple fans.
DearU's bubble
DearU's bubble

TO COMPETE WITH BTS’ WEVERSE

Such online fan platform markets have been dominated by Weverse, a unit of the BTS agency HYBE Co. Weverse reported 300 billion in revenue last year, helped by BTS. Its corporate value was estimated at up to 6 trillion won, according to the securities industry.

SM Entertainment and JYP Entertainment invested in DearU to compete with Weverse. SM Studios, SM Entertainment’s content subsidiary, is the largest shareholder with a 40.17% stake, while JYP Entertainment holds 23.27%.

The bubble currently provides messaging services with K-pop artists mainly from the two giants – JYP Entertainment’s TWICE and ITZY, as well as SM Entertainment’s rookie Aespa. The company expanded the service’s lineup of artists by inviting K-pop boy bands such as SF9, CNBLUE and N.Flying of FNC Entertainment Co.

DearU posted an operating profit of 6.6 billion won in the first half after reporting a 500 million loss in 2020.

The company plans to expand its digital services from the global fan messenger platform to a metaverse platform to eventually build a comprehensive entertainment platform.

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

Jongwoo Cheon edited this article.

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