Megazone Cloud to attract up to $336 mn for 2023 IPO

Megazone Cloud Corp., a leading cloud service provider and the first Korean business partner of Amazon Web Service (AWS), plans to attract 300 billion won to 400 billion won ($252 million to $336 million) in Series C Funding. Korea’s telecom operator giant KT Corp., which participated in the Series A Funding via its subsidiary KT Investment Inc., is reportedly considering direct investment this time around.

If clinched, the investment will raise the cloud company’s valuation to around 2 trillion won ($1.7 billion) from the current 1.5 trillion won. The South Korean company was valued at around 600 billion won in the second closing of the Series B Funding last June.

The cloud firm’s annual sales jumped from 253 billion won as of end-2020 to 900 billion won last year, putting the company in the black for the first time. These performances have been reflected in the corporate value increase, market watchers said.

Megazone Cloud is a managed service provider (MSP) that offers cloud service introduction, design, embedment and operation. The firm garnered huge attention in 2012 when it was selected as the first Korean partner of AWS. Formerly a cloud division within Korean IT company Megazone, it spun off in 2018. The cloud firm has more than 3,700 corporate clients and manages offices in the US, Canada, China, Japan, Hong Kong and Vietnam.

In the Series A Funding that took place in 2019, Megazone Cloud received a combined 49 billion won from 23 investors including state-run Korea Development Bank (KDB), Kakao Investment Co. and KT Investment. In the Series B Funding from 2020 to 2021, the firm attracted a combined 190 billion won from investors including Salesforce Ventures, global software company Salesforce’s investment arm.

Megazone Cloud will use the investment to secure IT talent and for global business expansion, as well as to prepare for its initial public offering. Beyond the leading MSP, it aims to become an integrated digital platform that offers non-fungible tokens (NFTs), artificial intelligence and virtual human services. Last year, the firm selected KB Securities Co. as the bookrunner aiming for an IPO in 2023.

Meanwhile, Korea’s cloud service market is rapidly growing as many corporates accelerate their digital transformation. Korean MSP Bespin Global Inc. announced last October it will seek 200 billion won in investment. In January 2021, Bespin's CEO Lee Han-joo said he aspires to cultivate Bespin to become a company with an enterprise value of 20 trillion won in 10 years.

Cloocus Co., Microsoft’s Korean partner and cloud solution company, is also planning for the next funding round. It attracted 23.5 billion won in Series A Funding in 2020.