Kakao Games pushes for September IPO

Kakao Games, the games unit of Korea’s mobile giant Kakao, has submitted a registration statement to the Financial Services Commission, with an intention of listing on the nation’s tech-heavy Kosdaq market in September.

By issuing 16 million new common shares, at a price between 20,000 won and 24,000 won ($16.70-$20.10) each, the game developer looks to raise as much as 384 billion won, Kakao Games said Monday via DART-- the Financial Supervisory Service’s electronic disclosure board.

Prior to going public, Kakao Games has so far issued some 57.2 million shares. Under the plan, the firm’s market capitalization after listing is anticipated to reach about 1.7 trillion won, which is expected to be the biggest deal in the second half of this year.

“With the locally biggest mobile game platform Kakao Games and the strongest PC games portal Daum Game, we would like to show our strength to the market (through the IPO),” said Kakao Games CEO Namkoong Whon.

“We’ll further put our best efforts to show our business growth through new businesses in the future.”

Book building is poised to take place Aug. 26-27, targeting institutional investors, ahead of determining its exact share price. Subscriptions will be accepted Sept. 1-2. Korea Investment & Securities and Samsung Securities are underwriters of the IPO deal.

The game developer was reportedly aiming to list in the second half of 2018, but delayed its plans due to the sluggish stock market and a delay in supervision by the Korean Institute of Certified Public Accountants, a mandatory process for an IPO.

Kakao Games was founded in 2016 after merging with the company Daum Games. The following year, its net profit came to 55.7 billion won, marking a turnaround from a net loss of 1.8 billion won. Its operating profit reached 32.3 billion won, jumping sixfold on-year.

While last year’s sales and operating profit marked 391 billion won and 35 billion won, respectively, the figures reached 96.4 billion and 12.7 billion in the first quarter this year. The three-year compound annual growth rate of the game developer recorded about 57 percent.

Market watchers’ expectations of the first Kakao subsidiary firm’s IPO are also growing.

“Our expectation toward Kakao Games was not that high earlier. However, as the firm’s profit is getting better and it is slated to launch new games such as Elyon, Guardian Tales and The Legendary Moonlight Sculptor in the second half, we’re looking forward to seeing the game developer’s further business growth,” said Kim Dong-hee, an analyst at Meritz Securities.

Buoyed by expectations on the game industry amid the coronavirus outbreak, Kakao Games’ value on the pre-IPO market has soared recently. According to over-the-counter trading platform Pstock, shares of Kakao Games were trading at 62,500 won as of Tuesday afternoon, a more than threefold increase from a year earlier at between 15,000 won and 20,000 won.

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