KakaoBank seeks to drive innovation through IPO of W2.55tr

KakaoBank CEO Yun Ho-young speaks during an online briefing with reporters on July 20. (KakaoBank)

South Korea’s first mobile-only bank, KakaoBank, on July 20 announced its goal of becoming the country’s # 1 retail bank in financial innovation through its market debut at the country’s senior board, Kospi, next month.

“KakaoBank has proven the business ability of a mobile app as it secured 16.15 million users (in the first quarter of this year) and went black within a year and a half (after the company was founded in 2017 ), “Yun Ho-young, managing director of KakaoBank, told reporters during an online press briefing.

“We have fostered the growth of our business by creating a synergy between banking activities and platform activities. It is a unique mechanism that other economic operators (in related fields) had never tried before.

The combined amount of transactions by users of the mobile-only commercial lender jumped 160 percent year-on-year to 79.1 trillion won ($ 68.7 billion) in the January-June period of this year. KakaoBank’s service is especially popular with people in their 20s and 30s, but the proportion of teens and people over 50 has increased four and six times, respectively, over the past four years, Yun said.

Fueled by the growing popularity, Kakao’s financial subsidiary’s net profit surged after posting its first profit in 2019. It posted net profit of 46.7 billion won in the first three months of this year, reaching quickly 40% of the previous year’s record of 113.6 billion. won, according to the company’s prospectus.

“I think the innovation is based on the high frequency of users. From this point of view, KakaoBank is the No. 1 financial platform in the country. … We will show our future growth based on a massive amount of capital after listing, ”he said, unveiling his market debut on August 6.

KakaoBank hopes to provide new financial services opportunities to users by actively using its innovative technologies, the power of its platform and the Kakao ecosystem. As part of this plan, the company seeks to extend its services to funds, insurance and wealth management.

It is also expected to introduce new products and services related to non-financial industries such as e-commerce and travel. The exclusively mobile bank emphasized its willingness to enter global markets through equity investments and form joint ventures using the proceeds of its IPO.

KakaoBank aims to raise up to 2.550 billion won from the IPO proceeds by offering approximately 65.45 million new common shares at a price range of 33,000 to 39,000 won. The exact share price will be determined after the book building process which is expected to end on July 21. The two-day retail tranche is scheduled to take place on July 26 and 27, with KB Securities and Credit Suisse Securities leading the way. subscribers.

The company’s market capitalization after listing is expected to reach nearly 18.5 trillion won. KB Financial Group’s market capitalization was 21.08 trillion won, while that of Shinhan Financial Group was 19.37 trillion won, as of the close on July 20.

Meanwhile, KakaoBank’s upcoming listing is of major importance to both the market and investors, as it is the first time in 27 years that a local financier has gone public after Kospi’s debut of the Industrial Bank of Korea in 1994.

But at the same time, the mobile-only banking valuation was also called into question as it was based on a price-to-book ratio of comparable companies, which only included foreign fintech companies such as Rocket Companies, TSC Group. Holdings and Nordnet AB.

KakaoBank CEO defended his move, saying it was difficult to define local financial players as his peer group due to its “distinctive business model” such as a contactless selling operation and its potential fundamental and differentiated growth, unlike ordinary local lenders.

By Jie Ye-eun ([email protected])

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