More venture capital firms target listing amid IPO boom

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By Anna J. Park

Amid the continued global initial public offering (IPO) frenzy with ample liquidity flowing into the equity market, some local venture capital firms are also planning to go public.

KTB Network, owned by KTB Investment & Securities and one of the first venture capital firms in Korea, is planning to pursue its own IPO on the tech-heavy Kosdaq within the year.

Based on its impressive track record of hundreds of successful investments over the past four decades, including massive returns from Viva Republica, the operator of Toss, and Woowa Brothers, KTB Network's net profit reached 35.8 billion won ($32.1 million) last year, the second-highest when compared to that of listed firms and just behind Aju IB Investment.

LB Investment is another leading firm that's known to be thinking about going public in the near future. According to industry sources, the company has been finalizing the specifics of its financial statements since the start of the year to ensure they satisfy the new IFRS global accounting standard.

The company had aimed to list itself in late 2018 having chosen Mirae Asset Securities as lead manager. However, the firm had to withdraw the plan, as the market conditions for venture capital firms were not ideal at the time.

Other yet-to-be-listed firms, including Stonebridge Ventures, HB Investment, and Capstone Partners, are all said to be taking steps towards an IPO.

While some of these companies have had failed IPO experiences in the past due to unfavorable market conditions, now is considered the right time. Not only have institutional and retail investors expanded their understanding of their business models, but also most of these firms are expecting record-high profits from the IPOs of companies in their portfolios.

Another factor behind more venture capital companies eyeing their own IPOs is the current stronger stock price performance by already listed fellow companies.

Major local venture capitals that have been listed on the stock markets have seen their stock prices skyrocket by an average 231 percent during the past year. Over the past six months, these listed firms' share prices increased by 111 percent, while average growth over the last three months was 47 percent, according to market research data. This is because investors bet on the expectations of their additional profitability from previous successful IPO investments, coupled with the ongoing frenzy.

Despite the recent surge, listed venture capital firms' average price-to-earnings ratio remained at 19.9 times, a level that is still considered decent for a listed stock.