Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Kakao's much-anticipated IPO to benefit KB
From left are KB Financial Group Chairman Yoon Jong-kyoo and Kakao Bank CEO Yoon Ho-young. Courtesy of each firm
By Lee Min-hyung
By Lee Min-hyung
KB Financial Group and its major affiliates will benefit from Kakao Bank's much-anticipated initial public offering (IPO), as the nation's largest banking group may be able to achieve gains of up to 1 trillion won ($895.2 million) by selling its stake in the internet-only bank after it goes public.
KB Kookmin Bank holds a 9.3-percent stake in the internet bank, and is the third-largest shareholder of the Kakao subsidiary. No other commercial banks here have made equity investments in Kakao Bank.
Other major conventional banking groups ― such as Shinhan, Hana and Woori ― do not welcome the rapid growth of Kakao Bank, which continues to steal retail customers, particularly in their 20s and 30s, away from the existing players.
But this is not the case for KB, as the bank joined hands with the Kakao subsidiary even before its establishment in 2017. Some of KB Kookmin Bank's executives took part in the founding of Kakao Bank by sharing their decades-long knowhow with the emerging company.
“The rise of Kakao Bank served as a wake-up call for conventional lenders that they should be more agile in pushing for digital transformation,” an executive at a bank said. “But the listing of the internet-only bank, in itself, does not pose a serious threat to existing lenders, as Kakao offers limited financial services targeting retail customers for now.”
According to data from Stock Plus, Kakao Bank's unlisted stock was traded at around 87,500 won per share as of Friday. The company's pre-IPO market capitalization also reached 35.7 trillion won.
This is much higher than the corporate values of the nation's major financial holding firms. KB Financial Group's market capitalization during the same period stood at 21.91 trillion won followed by Shinhan Financial Group at 19 trillion won.
The local securities industry estimates Kakao Bank's post-IPO corporate value to be as high as 20 trillion won.
The lender will go public on the main bourse sometime in the latter half of the year. The company has not fixed the exact timeline.
Kakao Bank's office in Pangyo, Gyeonggi Province / Courtesy of Kakao Bank
But Kakao Bank started its pre-IPO procedures last week by submitting a preliminary document for the Korea Exchange to review.
KB Kookmin Bank is not the only KB subsidiary that can benefit from the planned IPO of Kakao Bank. KB Securities has been picked as a lead manager along with Credit Suisse for the listing.
The securities arm of KB failed to win a contract to take part in any of the so-called “big” IPOs worth more than 1 trillion won in 2020; but has succeeded in winning a series of mega-contracts this year from companies such as LG Energy Solutions, Hanwha General Chemical and Kakao Bank.
Kakao Bank is one of the two internet-only banks here along with K bank. The Kakao subsidiary achieved a major turnaround in 2020 after suffering annual deficits since its foundation in 2017. The company generated 122.6 billion won in operating profits in 2020, up more than 800 percent from the previous year.
“Kakao Bank will likely go public sometime around July and August this year, and Kakao Pay, the mobile payment arm of Kakao, also plans to submit its pre-IPO review documents no later than the end of this month, which will help keep enhancing Kakao's corporate value from the mid- to long-term view,” Choi Kwan-soon, an analyst at SK Securities, said.