Netmarble debuts on Kospi, marking Korea’s biggest IPO in 7 years

South Korea’s Netmarble Games officially went public on Korea’s main bourse Kospi on Friday, marking the country’s biggest initial public offering in seven years.

Shares of the Korean mobile game giant opened for trading at 165,000 won ($146.70), above its IPO price of 157,000 won, and rose as high as 171,500 won, up 9.2 percent, in early morning trading before falling to hover slightly below the day’s opening price.

The stocks closed at 162,000 won, down 1.82 percent from the opening price. The price set the firm’s market capitalization at around 13.73 trillion won, making it the 21st highest-valued company on the Kospi, above big names like LG Electronics, Lotte Chemical and Kia Motors.

In terms of market cap, Netmarble also leapfrogs rival game companies listed on the Kospi including NCSoft, whose market value stood at around 7.69 trillion won as of Friday.

Netmarble has already secured 2.66 trillion won with its IPO, marking Korea’s largest public listing since 2010 when Samsung Life Insurance raised around 4.9 trillion won by going public.

With the new funds raised by the IPO, Netmarble is planning to make bold investment in larger strategic mergers and acquisitions to drive forward its global expansion and widen its business portfolio.

The mobile game giant said it is looking to leverage the newly generated capital to invest up to 5 trillion won toward strategic M&As as it seeks to emerge as one of the world’s top five game companies by 2020.

It has already been pursuing M&As to expand its presence in the West, acquiring US game maker Kabam’s Vancouver studio last year and puzzle game developer SGN, now named Jam City, in 2015.

“Today’s IPO will become an important turning point for Netmarble in raising its competitiveness in the global gaming market,” said Netmarble Games CEO Kwon Young-sig during a ceremony held Friday at the Korea Exchange headquarters in Seoul to mark the company’s public listing.

“We will continue our efforts to become a proud Korean game company that competes against major global game companies on an international scale,” he said.

Backed by China’s Tencent, Netmarble Games is the world’s ninth-largest game publisher in terms of in-app sales, according to app analytics firm app Annie. Around 50.5 percent of its 2016 revenue was generated overseas.

The company specializes in mobile games, releasing hit titles including “Lineage II: Revolution,” “Everybody’s Marble,” “Seven Knights” and “Marvel Future Fight” in Korea and global markets.

“Lineage II: Revolution” is currently the firm’s top-grossing mobile game. It was released in December in Korea and raked in some 206 million won in the first month of its launch.

However, there are newly emerging concerns the hit mobile role-playing game’s market value in Korea could decline as local regulators have recently banned minors from playing the game, citing issues with the in-game item trading system.

Korea’s Game Rating & Administration Committee on Wednesday raised the rating for “Lineage II: Revolution” to “adults only.” Previously, the game was rated as playable by those aged 12 and up.

Netmarble, which issued an apology for inconveniencing users, said it will swiftly work on fixing the issues raised by the regulators.

Adding to the concerns, NCSoft is planning to launch “Lineage M” — another mobile game set to directly rival and potentially steal away users from Netmarble’s hit game — in Korea in the coming months.

Looking ahead, Netmarble is preparing to launch the game in China by the fourth quarter of this year via Tencent, the Korean game maker’s third-largest shareholder and global publishing partner. The game is slated to arrive in Japan by the third quarter, the firm said.

In 2016, Netmarble posted 1.5 trillion won in revenue, up 40.4 percent on-year and 295.4 billion won in operating profit, up 31.3 percent on-year. It has yet to announce its first-quarter earnings for this year.

By Sohn Ji-young (jys@heraldcorp.com)