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Kakao Games IPO pre-orders set new record

Amid high market liquidity, investors flock to largest IPO on Kosdaq this year

Potential investors wait at a brokerage office in Seoul on Wednesday to apply for Kakao Games’ two-day retail subscriptions, ahead of the deadline. (Korea Investment & Securities)
Potential investors wait at a brokerage office in Seoul on Wednesday to apply for Kakao Games’ two-day retail subscriptions, ahead of the deadline. (Korea Investment & Securities)

Kakao Games, the gaming arm of local mobile messenger giant Kakao, set a record in South Korea on Wednesday by drawing the greatest value of preorder deposits for public subscription of its initial public offering.

Retail investors had submitted some 58.55 trillion won ($49.34 billion) in deposits during the two-day preorder session for stocks of Kakao Games, nearly double the record of 30.99 trillion won set by SK Biopharmaceuticals in June.

The amount of deposits surged more rapidly as time went by, beginning early Tuesday morning. While some 16.4 trillion won had flowed in on the first day of public subscriptions, an additional 42.1 trillion won was deposited solely Wednesday before its deadline at 4 p.m.

Retail investors were allowed to subscribe to 3.2 million shares, or 20 percent, of the 16 million new common shares to be sold under the planned IPO. As the company plans to raise 384 billion won, competition for shares by retail investors was 1,524.85 to 1.

“We would like to sincerely thank (aspiring investors) for evaluating Kakao Games’ corporate value and its potentials. We’ll put our best efforts to perform well in markets both in and out Korea,” a Kakao Games official said.

The heated response from retail investors was followed by news that the game developer’s offering price was fixed at 24,000 won per share, the top end of its indicative price range, during the institutional investors’ two-day tranche that was 1,479 times oversubscribed. It was the best showing since the book-building scheme was introduced in the local market in 1999.

As the deal is expected to be the biggest of its kind on the nation’s tech-heavy Kosdaq bourse in the second half of this year, both retail and institutional investors flocked to the preorders, hoping shares of the gaming arm of Kakao would spike as much as those of SK Biopharmaceuticals on the first day of its market debut.

Due to investors’ keen competition, the home trading system and mobile trading system of Kakao Games’ underwriters Korea Investment & Securities and Samsung Securities suffered technical glitches. It also has another underwriter, KB Securities.

“The contactless boom in the COVID-19 era and the precedent case of SK Biopharmaceuticals have boosted investors’ interest toward Kakao Games,” said a brokerage firm official who wished to remain anonymous.

Some retail investors even borrowed massive amounts to participate in the tranche. According to the Korea Financial Investment Association, the balance of credit loans taken out for stock investments by individuals had reached a record high of 16.27 trillion won as of Tuesday. The net asset value of cash management accounts offered by local brokerage firms also came to nearly 59.56 trillion won.

Ahead of its Kosdaq market debut on Sept. 10, Kakao Games’ value on the pre-IPO market has soared. Shares of Kakao Games were trading over the counter at 71,250 won at around 4 p.m. Wednesday -- up 12.2 percent from Aug. 25.

By Jie Ye-eun (yeeun@heraldcorp.com)
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