Kakao Pay to submit modified prospectus for IPO in October

A user makes a payment with the Kakao Pay app in this file photo. Courtesy of Kakao Pay

By Park Jae-hyuk

Kakao Pay decided to make only a slight adjustment to the range of its target initial public offering (IPO) price.

It plans to submit its modified prospectus to the financial authorities next week with an aim of going public in October, according to industry sources and media reports, Thursday. Kakao Pay has remained tight-lipped on the specifics of its IPO plan.

The mobile payment subsidiary of Kakao was forced by the Financial Supervisory Service (FSS) to adjust its prospectus, after it filed the document in July for its KOSPI debut on Aug. 12. The company had sought to price its stock ranged between 63,000 won ($54) and 96,000 won at that time, so that its market cap could reach up to 12.5 trillion won.

The FSS said that Kakao Pay's prospectus might hinder reasonable investments or cause a serious misunderstanding for investors. Its request has been interpreted by many as an order to lower the target price range.

Kakao Pay is said to have lowered the target price range by no more than 10 percent, in order to price its stock at somewhere between 56,700 won and 91,200 won.

SD BioSensor and Krafton, both of which were also ordered to correct their prospectuses, lowered their target price ranges by around 30 percent and around 10 percent, respectively, before they went public a few weeks ago.

“Although Krafton's valuation was controversial, its IPO price was eventually fixed at the upper end of the target price range, so Kakao Pay is expected to take into account the case of Krafton, which is the most recently listed large-cap stock,” Hyundai Motor Securities analyst Kim Hyun-yong said by telephone. “Kakao Pay's estimated valuation shows the market's willingness to bet on its high growth potential. The company has already finished receiving reviews from the market, when it disclosed its previous target IPO price range.”

Some market insiders attributed the slight adjustment to Kakao Pay's target IPO price to the fact that the fintech firm lowered its target price range after it mistakenly disclosed the range on the Korea Investor's Network for Disclosure (KIND) system in April, when it applied for a preliminary review by the Korea Exchange (KRX) of its IPO plan.

Meritz Securities analyst Kim Dong-hee said the envisioned listing of Kakao Pay in October has gained momentum from the successful IPO of KakaoBank earlier this month. The internet-only banking unit of Kakao became the largest financial company here in terms of market cap as soon as it made its KOSPI debut on Aug. 6.

“Kakao Pay's IPO is expected to take place in mid-October,” the analyst said in report. “This is the optimal timing for the company, considering that Kakao Pay Securities will start seeing rapid growth as an investment platform that month by launching a mobile trading system (MTS).”

The growing possibility of LG Energy Solution delaying its IPO is another favorable factor for Kakao Pay, because the fintech firm can avoid fierce competition with the large-cap stock. The LG Chem subsidiary asked the KRX recently to extend the preliminary review of its IPO plan, lowering the possibility of its KOSPI debut coming in October.