E-book platform Millie's Library drops IPO plan on tepid market interest

South Korean e-book platform Millie’s Library dropped its listing plan on Nov. 8 due to tepid demand from institutional investors, marking the 10th withdrawal of initial public offering (IPO) procedures in the country this year, The Korea Economic Daily understood.

Millie’s Library held bookbuilding sessions for institutional investors, such as pension funds and insurers, on Nov. 4 and Nov. 7. The sessions for 1.5 million shares, or 75% of the entire amount of IPO shares, had a competition rate below 10 to 1.

The few institutional investors who participated in the bookbuilding proposed the lower range of the price band between 21,500 won ($15.8) and 25,000 won. Most of the participants didn’t sign up for an IPO lock-up, the restriction on major shareholders from selling stocks for a certain period after going public.

INVESTOR SENTIMENT REMAINS CHILLY ON PLATFORM COMPANIES

Investors have become reluctant to bet on platform companies as some platform shares have plunged this year, according to market insiders. Car-sharing firm Socar's shares, which hit 29,600 won on its first day of the public offering, Aug. 22, had nearly halved to 15,100 won on Oct. 5.

Some investors also doubt the growth potential of the e-book business amid the increasing popularity of webtoons and web novels.

Market sentiment became further lukewarm due to the exit plan of existing Millie’s Library shareholders, IB sources said.

The e-book platform was planning to raise 43 billion won to 50 billion won through sales of 2 million shares, allocating 20% of the raised capital to financial investors including venture capitalists HB Investment, STIC Investments and Nice Investment Partners. The remaining 80% was to be used for business diversification.

Some investors said the e-book platform was overvalued during the IPO procedures.

Lead manager Mirae Asset Securities calculated the corporate value as 276.1 billion won, forecasting its revenue and operating profit to double and quadruple, respectively, next year compared to this year’s preliminary figures.

The peer group for valuation comprised three listed webtoon firms, Kidari Studio, DNC Media and MrBlue. Mirae Asset applied the firms’ price-earnings ratio (PER) of 27.98 times and put a discount rate of 21.65-32.62%. The market cap of Millie’s Library is 186 billion won to 216.3 billion won, based on the public share prices.

The e-book platform is said to have considered pushing the IPO process by reducing the number of IPO shares and lowering the price band, but faced existing shareholders’ opposition to cutting the share price.

The IPO market conditions will be tough for platform companies for some time, according to IB sources. Fintech platform stocks such as KakaoBank Corp. and KakaoPay Corp. have respectively plummeted around 75% and 81% since their public offerings. Korea’s homegrown app store One Store Co. also canceled its IPO plan due to weak demand from institutional investors in May.

Other IPO dropouts this year include Hyundai Engineering Co., SK Shieldus Co., Hyundai Oilbank Co. and Golfzone Commerce Co.

Write to Ye-Jin Jun at ace@hankyung.com
Jihyun Kim edited this article.