Kakao Games Shows South Korean Investors’ Mania for IPOs

(Bloomberg) -- Retail investors were so keen to get their hands on shares of South Korean game developer Kakao Games during its initial public offering that they put in tens of billions of dollars of orders for a $323 million deal.

Individual investors submitted orders for 1,524 times the amount of stock made available to them with 58 trillion won ($48.8 billion) in bids, according to SK Securities in a note. At Korea Investment & Securities Co., one of the lead arrangers for the deal, its mobile trading system for retail investors was halted for 20 minutes on Wednesday as users piled in for the deal, a spokesperson said by phone.

The investors’ exuberance for the offering is the latest example of insatiable demand for IPOs as markets are flooded with liquidity from central banks’ efforts to stave off the economic damage of the coronavirus pandemic. In Hong Kong a slew of biotech share sales have attracted hordes of retail investors keen to capitalize on a health-care boom.

Local media reported that the retail subscription for Kakao Games was a record in the country, beating that for SK Biopharmaceuticals Co. which listed in July. The biotech firm, which soared 159% on its debut, received 31 trillion won in bids from retail investors.

“Frankly, I’m not sure if it’s right to give high multiples to Kakao Games,” said Jeon Kyung-dae, chief investment officer for equities at Macquarie Investment Management Korea in Seoul who applied for the shares. “But the point is those kinds of growth stocks are so hot in Korea. No one can estimate exactly the valuations of these kinds of stocks. This is a party with liquidity.”

Gaming and Internet stocks were one of best-performers in Korea’s stock market this year, as the persistent spread of coronavirus spurred investors to flock to businesses benefiting from the stay-at-home trend. Kakao Corp., the parent company of Kakao Games that operates the nation’s most-popular chatting app and a portal search website, surged 167% this year while Netmarble Corp., a gaming stock that is holding a stake in Big Hit Entertainment Co., has jumped 110.5%.

Investors who couldn’t get their hands on shares of Kakao Games are expected to try other listings, such as Big Hit Entertainment, the agency of K-pop artist group BTS, SK says. Big Hit is seeking as much as $812 million in its IPO which is set to be the country’s largest in three years.

UPCOMING LISTINGS:

• Yum China
  • Hong Kong stock exchange
  • Size up to $2.5b
  • Pricing Sep. 4, listing Sep. 10
  • Goldman Sachs, Citi, CMBI, UBS
• Kioxia
  • Tokyo stock exchange
  • Size up to $3.3b
  • Pricing expected Sep. 28, listing Oct. 6
  • Morgan Stanley, Goldman Sachs, JPMorgan, Nomura, Bank of America
• Nongfu Spring
  • Hong Kong stock exchange
  • Size $1.08b
  • Listing Sept. 8
  • CICC, Morgan Stanley, CLSA, Citi
• Big Hit Entertainment
  • South Korea exchange
  • Size up to $812m
  • IPO pricing on Sept. 28, subscription from Oct. 5-6
  • NH Investment, Korea Investment, JPMorgan
• Kakao Games Corp.
  • South Korea exchange
  • Size $323m
  • Listing TBA
  • Korea Investment, Samsung Securities
• Happiest Minds Tech
  • India stock exchanges
  • Size up to $96 million
  • Offer runs from Sept. 7-9, listing around Sept. 17
  • Nomura, ICICI

• Gland Pharma Ltd.

  • India stock exchanges
  • Filed July 10
  • Citi, Haitong, Nomura, Kotak

• Kalyan Jewellers India Ltd.

  • Indian stock exchanges
  • Size as much as $235m
  • Axis Capital, Citi, ICICI Securities, SBI Capital Markets and BOB Capital Markets

More ECM transactions we are following:

• Yum China Holdings Inc. will stop taking investor orders for its Hong Kong share sale earlier than planned, according to people familiar with the matter
• Lee Wai Keong, one of the co-founders of Riverstone Holdings Limited, sold 15.5 million shares in the company in a share placement, according to terms of the deal obtained by Bloomberg
• Venus Medtech (Hangzhou) Inc. agreed to sell 18.5m new H shares at HK$64.19 apiece in a placement, according to a statement to the Hong Kong stock exchange
• Xinyi Solar to raise HK$2.66b in upsized share placement

See also:

• Asia ECM Weekly Agenda
• IPO data
• U.S. ECM Watch
• EU ECM Watch
• To receive the ECM Watch in your inbox daily, click the “subscribe” button at the top of this article.

©2020 Bloomberg L.P.