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| A KineMaster user edits video using the app. / Courtesy of KineMaster |
By Park Jae-hyuk
The takeover of KineMaster by an overseas company has become more likely, after the Korean mobile video editing service provider's largest shareholder, Solborn, hired Nomura Financial Investment as underwriter and Kim & Chang as legal adviser for the planned sale.
The move was announced Friday, two weeks after KineMaster's major shareholders confirmed their plan to sell a combined 55.02 percent stake. They said at that time the selection of an underwriter and advisory firms was underway, but a KineMaster official confirmed earlier that Kim & Chang would handle legal issues regarding the deal.
Given that Kim & Chang is a top law firm here, market participants view its participation as an indication of Solborn's intention to talk with global players, such as Google or Facebook. The largest shareholder's decision to hire a foreign investment bank instead of a Korean one can also be interpreted as support for speculative investors.
Some retail investors expect the selection of the Japanese investment bank will lead to a takeover of KineMaster by a Japanese company, such as SoftBank. Nomura, however, has built its business network throughout the globe after acquiring the bankrupt Lehman Brothers' operations in Europe and Asia.
In 2017, Nomura enabled a 60 percent stake in the AHC brand Carver Korea to be sold to multinational consumer goods company Unilever for $2.7 billion. The acquisition was the largest M&A deal in the Korean cosmetics industry.
At that time, most market insiders anticipated Goldman Sachs would serve as the underwriter for the deal because the seller of Carver Korea was the Bain Capital-Goldman Sachs consortium. According to industry sources, Nomura got involved in the deal because its U.S. subsidiary invited Unilever to the takeover bid. Its Seoul office reportedly assisted in the task.
The Japanese firm also collaborated with Kim & Chang for the Carver Korea deal.
The KineMaster official did not rule out the possibility of a foreign firm's acquisition, saying there were a few companies providing similar services in Korea. Solborn said in its regulatory filing that it will make additional announcements within a month.
Founded in 2002 as NexStreaming, KineMaster operates a mobile video editor app, which generates 80 percent of its revenue, and mobile video player PlayerSDK which produces the rest.
As of the end of September this year, the KineMaster app hit 340 million downloads worldwide. The app had 68 million monthly active users (MAU) on average during the third quarter.
The Kosdaq-listed company posted 8.6 billion won ($8 million) in sales during the third quarter, a 57.26 percent increase from a year earlier. With its subsidiaries in the U.S., China and Spain, it has carried out marketing campaigns using global social media platforms, such as Facebook, YouTube and TikTok. The number of subscribers to its YouTube channel tops 1.5 million.
As of last week, its market cap was 325.8 billion won. Considering TikTok had previously been valued at 50 times its sales projection for this year, the valuation of KineMaster could possibly jump to 1 trillion won, according to industry officials. If the company is sold to Google or Facebook, it will be the first time for the global tech giants to buy a Kosdaq-listed company.
