The launching event of “Stellar Blade” on April 26, 2024 (Courtesy of Yonhap)
Shift Up Corp., a South Korean game developer behind a global hit game “Goddess of Victory: Nikke,” would raise up to 435 billion won ($313 million) from its upcoming new share sales on the country’s main Kospi bourse, which will be used mainly to develop new titles with seasoned developers.
The game developer plans to sell 7,250,000 new shares in the public market, and its guided initial public offering price band is set between 47,000 won and 60,000 per share, according to the company’s announcement on Tuesday.
If the IPO stock price is set at the top end, the company’s market cap will reach up to 3.5 trillion won, which would be the fourth largest among Korea’s listed gaming companies after Krafton Inc., Netmarble Corp. and NCSOFT Corp.
If its IPO is successful, it is expected to give a big boost to other Korean gaming companies’ public listings later this year, market analysts said.
Shift Up will use the IPO proceeds mainly to develop new games, instead of acquiring existing intellectual properties (IPs) of other developers or publishers, to reinforce its identity as an unrivaled game developer, Shift Up founder and Chief Executive Officer Kim Hyung-tae, also former NCSOFT graphic designer, said during a press conference on the company’s IPO plan on Tuesday.
Shift Up’s press conference on its IPO plan on June 25, 2024
FORTE IN GAME DEVELOPMENT
Shift Up’s strength lies in its ability to develop high-quality games with the industry’s top developers and designers.
A year ago, it scouted former OpenAI engineer Kim Tae-hoon to enhance its game artificial intelligence (AI) technology.
Its latest title “Stellar Blade,” which is a console game, sold more than 1 million copies in two months since its launch in April.
The new game’s sales topped in eight countries, including the US, the UK, Canada and Japan, garnering 15.8 billion won in sales in May.
Another title “Goddess of Victory: Nikke,” which was published in early 2022, remains a popular game, reaping 15.5 billion won in sales last month alone.
Nikke is a third-person shooting game, which is a role-playing game (RPG). It is free-to-play and uses a gacha (toy vending machine) game system for monetization.
Shift Up’s sales don’t depend heavily on one title, boding well for the company’s future growth, said market analysts.
“Goddess of Victory: Nikke” (Screenshot captured from Shift Up)
OVERVALUATION CONCERNS
But some analysts raised concerns about the possible overvaluation of the company estimated at over 3 trillion won for the upcoming IPO.
Its IPO underwriters estimated Shift Up’s enterprise value based on a 39.25 times price-earnings ratio, compared with the 35-41 times of its global peers such as Square Enix Holdings Co., Cyberagent Inc. and Kadokawa Corp.
This is as high as Korea’s largest market-cap game stock Krafton’s PER of 43.8 times applied during its IPO in 2021, which was considered overpriced.
Shift Up, which debuted its first game “Destiny Child” in 2016, was valued at around 2 trillion won last October when Chinese tech giant Tencent Holdings Ltd. acquired an additional 4% stake in the game developer from Korean gaming company Wemade Co.
Tencent owns about a 40.1% stake as the second-largest shareholder, following Shift Up CEO Kim who holds 45%.
Its value increased by more than 75% over the past six months thanks to its record earnings and games. The company posted 111 billion won in operating profit in 2023, up 328% on-year, and 168.6 billion won in revenue, up 155% during the same period.
Its Japanese peer Square Enix, however, earned 85.6 billion yen ($535.5 million) in revenue in the first quarter of this year only.
Shift Up will determine its IPO stock price on Thursday with its lead co-underwriters — Korea Investment & Securities Co., NH Investment & Securities Co. and JP Morgan Securities’ Seoul office.
The public subscription of the shares is scheduled for July 2 and 3.
By Ju-Hyun Lee
2juhyun@hankyung.com
Sookyung Seo edited this article.
