KakaoBank soars by over 70% in Korean online lender’s debut

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(Bloomberg) – KakaoBank Corp., South Korea’s first internet-only lender to go public, jumped more than 70% on business debut in Seoul to become the country’s largest retail lender by market value .

The 74% jump in the stock gave the company, which has no physical branches, a market capitalization of more than 32 trillion won ($ 28 billion), higher than that of traditional financial groups in the United States. country. It was up 62% as of 11:10 a.m. in Seoul.

Day one pops aren’t unusual in South Korea, where influential retail investors want to buy stocks on the first day of trading for quick returns. Almost half of the 113 companies listed in Seoul in the past 12 months ended their inaugural session at least 30% higher than the initial public offering price, according to Bloomberg data. Nineteen of them, including KakaoBank’s sister company, Kakao Games Corp., closed by the 160% daily limit.

The bank’s IPO could mark a change in the map of South Korean financial groups. Prior to KakaoBank’s commercial beginnings, the country’s largest financial firm was KB Financial Group Inc. with a market value of around 22 trillion won, followed by Shinhan Financial Group Co. with around 20 trillion won and Hana Financial. Group Inc. with approximately 13 trillion won.

At its IPO price, KakaoBank was valued at 18.5 trillion won, even though its assets were less than a tenth of those of some of the country’s largest retail banks.

KakaoBank’s $ 2.2 billion bid is the biggest this year after Krafton Inc. The developer of the hit game PlayerUnknown’s Battlegrounds is expected to debut in trading on Tuesday after issuing $ 3.8 billion in shares .

“Current market capital appears to have exceeded expectations,” BNK Securities analyst Kim In said in a research note ahead of KakaoBank’s debut, launching a hedge with a “sell” rating and a price target. by 24,000 won, lower than the IPO Price. “The reality is that there is huge concern about the stock’s sharp drop.”

Many projects through his platform companies are difficult to execute while his profits from these new companies are meager, Kim said. Most of its profits come from interest rates and loans, just like other traditional banks, he said.

KakaoBank is the latest publicly traded company among affiliates of Kakao Corp. Kakao Games raised 384 billion won in September, and its shares have climbed about 250% since the IPO. Kakao Pay Corp., the country’s largest online payments service, was looking to debut on Aug. 12, but listing was delayed after regulators asked it to revise its prospectus. Further IPOs are expected to follow in Kakao, with its potentially public ridesharing, entertainment and Japan business units. KakaoBank was established in 2016 after the Korean government first offered online banking licenses in 2015. The online banking benefited from the parent company’s messaging service with 46 million active users over a population of about 51 million inhabitants. Viva Republica Ltd. plans to launch Toss Bank as early as September after receiving the country’s third online banking license. K Bank, which has amassed new users in the cryptocurrency space, has raised 1.2 trillion won from shareholders, including Bain Capital.

(Updates with Day 1 performance of other companies in the third paragraph.)

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