Kakao Pay Corp., South Korea’s largest online payment service, lowered its targeted initial public offering to $1.3 billion at the behest of Korean regulators concerned about soaring tech valuations.
The fintech startup follows PUBG-developer Krafton Inc. in scaling back IPO targets after regulators questioned tech valuations and comparisons with high-flying overseas peers. The Pangyo-based company is now seeking to sell 17 million shares at a lowered range of 60,000 won to 90,000 won, versus a previous 63,000 to 96,000 won.
The share sale would raise 1.53 trillion won at the top of the range, down from an earlier target of 1.63 trillion won. The firm, backed by Jack Ma’s Ant Group Co., said in a filing it plans to debut in Seoul on Oct. 14 with a maximum market capitalization of about 11.7 trillion won.
South Korea has been riding an IPO boom driven by a retail frenzy that’s fueled $14 billion in first-time share sales this year. But Krafton’s tepid August debut dampened the mood. While sister company KakaoBank Corp. soared 70% on debut, Krafton fell 8.8% on its first day.
LG Energy Solution, which had been expected to attempt a mammoth offering, said on Monday it will decide by October whether to proceed with a 2021 IPO after becoming ensnared in General Motors Co.’s $1.8 billion Chevrolet Bolt recall.
The Financial Supervisory Service didn’t explain why it asked Kakao Pay to revise its prospectus. The main underwriters for its IPO — Samsung Securities Co., JPMorgan Chase & Co. as well as Goldman Sachs Group Inc. — had valued the firm by comparing it with far larger global peers like PayPal Holdings Inc., Square Inc. and Brazil’s Pagseguro Digital Ltd. In Tuesday’s prospectus, underwriters had removed PayPal and Square.
Kakao Pay’s revenue more than doubled to 284 billion won last year, while it cut net losses by 61% to 25 billion won. It posted first-half revenue of 216 billion won and an operating profit of 2.6 billion won, without comparisons.
The amount of transactions in the first half of this year rose 62% to 47.3 trillion won, while payment services rose 82%, the company said in a statement. Kakao Corp. holds 55% of Kakao Pay, while Ant has a 45% stake through Alipay Singapore Holdings.
