The company behind the global blockbuster PlayerUnknown’s Battlegrounds plans to raise up to 5.6 billion won ($ 5 billion) in initial public offering expected to be largest ever in Korea from South.
Krafton said in a regulatory filing on Wednesday that he would sell more than 10 million shares at Won458,000-Won557,000 each, with the high end of that range giving him a market cap of Won28tn. The IPO price will be set on July 9 before the company goes public in Seoul on July 22.
The highly anticipated list is expected to overtake that of Coupang, South Korea’s leading e-commerce company that raised $ 4.6 billion in New York City in March.
Krafton, formerly known as Bluehole, was founded by Chang Byung-gyu in 2007. PUBG, a so-called battle royale game in which players fight to the death on a remote island, was released in 2017 and represents the core of Krafton’s income. . The game has sold over 75 million copies on PC and consoles, while its mobile version has been downloaded over a billion times. Krafton’s operating profit more than doubled to 774 billion won last year, as sales jumped more than 50 percent to 1.67 billion won.
However, the company cited the uncertainty of overseas expansion and domestic regulation as investment risks.
“Despite our successful experience in entering foreign markets, our past experience does not guarantee our future success given the different language, culture, customs and legal and regulatory environment,” Krafton said in his file.
South Korea is on track for a record year for IPOs amid huge interest from retail investors. The Kospi benchmark is trading near all-time highs, supported by ultra-low interest rates and the country’s strong economic recovery after Covid-19. Investment bankers have predicted that IPO proceeds will more than quintuple to at least 25 billion won in 2021.
Other pending IPOs include LG Energy Solution, the world’s largest manufacturer of electric vehicle batteries, which is expected to rise by 10-15,000 won in September. Hyundai Heavy Industries, a shipbuilder, is expected to raise $ 1.1 billion to $ 1.5 billion in August. More modest deals include the IPOs of Kakao Pay and Kakao Bank, units of the country’s main courier service provider.
“Krafton’s IPO will be popular among investors, given the growing investor interest in new growth areas such as electric vehicle batteries, gaming and online business,” said a banker at investment close to the agreement. “But society is heavily dependent on one game and it is not known how long the popularity of the game will last.”
Some analysts have expressed concerns about Krafton’s high valuation based on its IPO price.
“Krafton’s valuation appears stretched, given that its market capitalization will exceed that of NCSoft, although NCSoft is making more money than Krafton,” said a local analyst referring to one of the firm’s competitors.
Krafton plans to use the proceeds of the IPO to develop new games, acquire other developers, enter markets such as India and the Middle East, and invest in technologies such as artificial intelligence.
After the IPO, Chang will own a 14% stake, followed by Chinese internet group Tencent with 13.2%, according to company documents.
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