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| "PlayerUnknown's Battlegrounds" is Krafton's most popular video game with players worldwide. Courtesy of Krafton |
Global online video game parent company to go public at KOSPI market within H1
By Anna J. Park
Korea-headquartered video game holding company Krafton, one of the most anticipated initial public offerings (IPOs) in 2021, is set to begin its official IPO process later this month.
According to banking sources Monday, Krafton ― the parent company of globally successful independent game developing studios, including PUBG Studio, Bluehole Studio, RisingWings and Striking Distance Studios ― plans to submit required documents to the Korea Exchange (KRX) for a preliminary review process for the main benchmark KOSPI market later this month or early next month, which is the first official step towards an IPO.
Given that the preliminary review process usually takes 45 business days or around two months to complete, Krafton is expected to make its stock market debut in June at the earliest. Considering the IPO timeline, the online game company's performance in the first quarter of this year will likely be included in the assessment of the firm's corporate value and offering prices.
As the parent company of game development studios with global hits, including "PlayerUnknown's Battlegrounds" and "Elyon," Krafton's market cap is estimated to be around at least 24 trillion won ($21 billion).
Although the estimation means that Krafton's corporate value would be slightly greater than that of NCSOFT, the nation's largest video game developer known for "Lineage," Krafton's estimated corporate value is not standing at an overstated value at all, because of the company's consistent and solid net profits of hundreds of millions of dollars it garners every year from global users.
The most successful online game by Krafton subsidiaries is undoubtedly "PlayerUnknown's Battlegrounds" published by PUBG Studio, which was released back in March 2017. The shooter game's instant and massive global popularity led to the game's mobile version being released in 2018, another huge success. The mobile game's popularity continues to this day, and it was ranked as the world's top-grossing mobile game in February this year as well.
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| Official logo of Krafton |
Quantum growth in profits
Based on its games' popularity, Krafton has reported solid revenue growth as well as profits. The game holdings company recorded an annual revenue of 1.12 trillion won in 2018 with operating profits of around 300 billion won, followed by 2019's annual revenue of 1.08 trillion won and operating profit of 359 billion won.
Last year, the firm's performance far exceeded its previous records. For the first nine months of last year ― the fourth-quarter result hasn't been released so far ― the company's revenue stood at 1.23 trillion won with an operating profit of 681 billion won. This is a 78.6 percent increase in revenue, compared to the same period of 2019, and a whopping 327.1 percent jump in operating profit. Net profit also jumped by 258.6 percent to 514 billion won.
Industry sources say the firm's revenue and profit results during the fourth quarter as well as during the first two months of this year are pretty positive for the firm's IPO valuation set to be finalized in the coming few months. If the good results of the first quarter could be reflected, the corporate value could further exceed the estimated 24 trillion won level.
Krafton selected Mirae Asset Daewoo as its book runner, while four other firms ― Credit Suisse, Citi Global Market, JPMorgan and NH Investment and Securities ― will also cooperate for the IPO as underwriters.
