South Korea's Kakao Bank shares soar in market debut

SEOUL (REUTERS) – South Korea’s Kakao Bank jumped 38 per cent above its initial public offering (IPO) price on its market debut, amid growth expectations for the digital bank’s planned mobile mortgage business and other offerings.

The listing is the country’s biggest since game company Netmarble’s IPO raised 2.7 trillion won (S$3.19 billion) in 2017, continuing a bumper year for South Korean stock market floats, despite some valuations being slashed in recent offerings.

The digital bank began trading on Friday (Aug 6) at 53,700 won per share compared with its IPO price of 39,000 won, then soared shortly after to as much as 74 per cent above the IPO price. This compared with a 0.1 per cent rise of the Kospi benchmark index.

Its largest shareholder is Kakao Corp, operator of South Korea’s dominant chat app, with a 27.3 per cent stake.

Kakao Bank, South Korea’s first digital bank to go public, became profitable in 2019 after less than two years in operation and has 13.35 million monthly active users, it said last month.

The opening price valued Kakao Bank at 25.5 trillion won, which made it the 16th largest stock on the Kospi, based on Thursday’s closing valuations. In morning trading on Friday, it climbed to the 11th largest stock on the Kospi, excluding preferred shares.

Analysts said its high valuation, which overtook market capitalisations of established banking groups such as KB Financial Group and Shinhan Financial Group as at Friday, could not be explained by traditional bank valuation measures.

“Kakao Bank’s stock price-to-earnings ratio based on the IPO price is a multiple of 56, while that of existing banking shares is around a multiple of five. It’s got the valuation of a different industry,” said IBK Investment & Securities analyst Kim Eun-gab.

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