Big Hit opens IPO subscription amid big fanfare

K-pop band BTS performs “Dynamite” on NBC's The Tonight Show Starring Jimmy Fallon on Oct. 2. Yonhap

By Lee Min-hyung

Big Hit Entertainment opened a two-day public subscription period Monday ahead of its initial public offering (IPO) planned for mid-October amid hopes of setting another milestone in raising record investor deposits.

The initial offering price of the music label, home to mega-hit boyband BTS, has been set at 135,000 won ($116.22) per share.

Market analysts expect the firm's stock value to more than double on the first day of its listing on Oct. 15, and top as high as 380,000 won, on its rosy outlook for growth, with its boy band BTS' single “Dynamite” rebounding to top the BillBoard Hot 100 last week.

All eyes are on whether Big Hit will be able to surpass Kakao Games in terms of raising the record amount of investor deposits on the first day of the pre-IPO subscription.

The Kakao subsidiary raised 16.4 trillion won and 42.1 trillion won respectively in two days from Sept. 1, drawing a record deposit by surpassing the previous high of SK Biopharmaceuticals.

Local brokerages' target stock price for Big Hit ranges from 160,000 won to 380,000 won after it goes public on the main KOSPI bourse.

“Our target price of the company is around 240,000 won, but the firm will top the level soon after the IPO given the rosy market circumstance and BTS' global fandom,” IBK Securities analyst Park Yong-hee said.

“But chances are its stock performance will become sluggish undergoing an adjustment period after the IPO, just like Kakao Games and SK Biopharmaceuticals,” the analyst said.

Early last month, Kakao Games went public on the secondary stock market with much fanfare, and set a new high for two consecutive days for its share price. Its value reached as high as 81,100 won, a day after its listing, but has since fallen to around 54,000 won as of Monday.

Hana Financial Investment set the highest target price of the company at 380,000 won, saying that its market capitalization will surpass 14 trillion won after the IPO on expectations for growth potential of the firm's fan community platform, Weverse, which Big Hit touts will become an online version of Disneyland. The platform allows fans to communicate with the idol groups from Big Hit and purchase merchandise.

“The platform comes with a great amount of expandability,” Hana Financial Investment analyst Lee Ki-hoon said. “More foreign artists can join Weverse and the platform will serve as a central place for Bit Hit to launch global groups.”