Dear U aims to launch K-pop metaverse platform via IPO

Dear U, a company under S.M. Entertainment that provides a platform service connecting K-pop stars and their fans, is looking to launch a metaverse platform with funds to be raised through its initial public offering.

“We are looking forward to establishing a solid foothold as the No. 1 global communication platform provider through listing on the country’s secondary Kosdaq market. We are planning on expanding our services such as a metaverse platform,” Dear U Vice President Lee Hak-hee told reporters during an online press briefing on Friday.

Under the plan, the company seeks to raise up to 79.2 billion won ($67.9 million) through its IPO by offering 3.3 million new common shares in the price range of 18,000-24,000 won. The exact share price will be fixed after the two-day book-building process that is slated to wrap up on Tuesday. The public subscription is also scheduled to be held on Nov. 1-2, and Korea Investment & Securities is underwriting the deal.

Founded in 2017, the company has been operating a subscription-based fan communication platform called DearU bubble since last year. The monthly subscription-based service allows K-pop fans to engage with their favorite artists by exchanging mobile text messages.

The platform, which has a total of 229 artists from 23 local entertainment firms, has garnered 1.2 million subscribers as of August this year. The major lineup of artists includes S.M. Entertainment’s aespa and EXO and JYP Entertainment’s Twice and ITZY. It recently invited K-pop boy bands such as SF9 and CN Blue of FNC Entertainment as well.

Dear U hopes to use the IPO proceeds to build a comprehensive entertainment platform by riding the metaverse wave. It also plans to use the funds to secure intellectual property rights for global artists and develop new business models.

The company sees metaverse as a new source of income, banking on the synergy it can create when combined with entertainment platforms, the vice president said. He said he believes there are “no limits” to the expansion of the business.

The spike in the number of subscribers has boosted the software developer’s earnings. The 4-year-old firm’s revenue in the first half of this year came to 18.4 billion won, surpassing the annual revenue of 13 billion won marked last year. Its operating profit and net profit came to 6.6 billion won and 5.3 billion won in the January-June period, the company said.

“Fandustry,” a portmanteau of “fandom” and “industry,” is also gaining traction on the back of K-pop artists’ immense global popularity. According to a report released by the Ministry of Foreign Affairs and Korea Foundation in July, the number of global K-pop fans exceeded 100 million last year, while their Hallyu-related spending marked around 8 trillion won.

S.M. Entertainment’s subsidiary, SM Studios, is Dear U’s biggest shareholder with a 40.17 percent stake. JYP Entertainment, which acquired a 23.27 percent stake in June, comes second.

By Jie Ye-eun (yeeun@heraldcorp.com)