Kbank, a South Korean online bank, is preparing to list on the main bourse Kospi at an estimated corporate value of up to 5 trillion won ($3.8 billion) in the fourth quarter of this year in what would be the country’s largest initial public offering this year, according to securities industry sources.
It is now assessing its valuation in comparison with bigger domestic peer Kakao Bank Corp. and Brazilian fintech PagSeguro, the sources said on Thursday. The timing might not be ideal for its flotation with the domestic IPO market rally running out of steam.
But Kbank is aiming to push through with its IPO this year after its first attempt to go public in June 2022 went awry due to high interest rates and lethargic stock market, the sources added.
Kbank will submit an IPO prospectus to the Korea Exchange this month.
Its largest shareholder is South Korea’s card processing company BC Card with a 33.72% stake. Woori Bank, part of Woori Financial Group, holds a 12.58% stake as of the end of June.
(Graphics by Dongbeom Yun)
Kbank’s estimated valuation is about half of Kakao Bank’s market capitalization of 10 trillion won and about 60% of its projection of 7 trillion-8 trillion won back in June 2022.
It will apply two to three times its book value of 2 trillion won to assess its enterprise value, and then discount it by 20-30% as IPO companies normally do.
Kakao Bank, a unit of South Korea’s dominant mobile platform, went public in 2021 at an estimated valuation of 15.7 trillion-18.5 trillion won, or seven times its book. It is the country’s first online bank listed on the Korean stock market.
But its share price has plunged to half of its IPO price of 39,000 won, or 1.6 times its book.
In comparison, Brazilian mobile payment app PagSeguro is trading at 1.4 times its book.
If Kbank’s flotation goes through, it will be the country’s largest IPO since Kakao Pay Corp., a fintech platform, went pubic at a valuation of 8.2 trillion won in 2021.
High-profile IPOs on the Korea Exchange this year include HD Hyundai Marine Solution Co. at an enterprise value of 3.7 trillion won and Sift Up Corp., a Tencent-backed video game developer, was listed at a valuation of 3.5 trillion won.
Industry observers said Kbank’s heavy reliance on Upbit as a downside risk.
Nearly half of accounts at Kbank are related to Upbit, a cryptocurrency exchange operator, meaning half of its customers uses the bank platform for cryptocurrency transactions. Thus its operating profit is highly vulnerable to Bitcoin and other cryptos’ performances.
By Jeong-Cheol Bae
bjc@hankyung.com
Yeonhee Kim edited this article
