Krafton Inc, the South Korean creator of the global gaming sensation “PlayerUnknown’s Battlegrounds”, also known as PUBG, is setting its sights on a colossal $5 billion IPO. This move could set a new record as the country’s biggest market debut ever.
Krafton has made public its intentions via a regulatory filing to issue 10 million shares—including 7 million fresh shares and 3 million currently held shares—with a price bracket ranging from 458,000 to 557,000 won per share. Should these shares hit the market at the top of this range, the IPO would surpass the 4.9 trillion won raised by Samsung Life Insurance in 2010, outperforming the $4.6 billion amassed by South Korean e-commerce leader Coupang in its New York listing earlier in March.
Market watchers can expect the final price to be nailed down by July 9, with Krafton debuting on the exchange on July 22.
The success story of PUBG is well-documented, with the game causing ripples all over, prompting some countries to impose temporary bans. It has witnessed sales of 25 million units on PCs and consoles and has accumulated over 1 billion mobile downloads. Two additional games are lined up for release this year, further cementing PUBG’s legacy, with “PUBG: New State” and “Battlegrounds Mobile India” specifically designed for Indian gamers.
Krafton cautioned in its IPO filing, noting that its past success in international markets is not a guaranteed predictor for future triumphs due to the variance in languages, cultures, customs, and legal landscapes.
The gaming behemoth is not resting on its laurels—plans are afoot to branch into online comics, films, and animation, likely fueled by the forthcoming IPO. Additionally, the firm is channeling resources into advanced machine learning applications to refine its AI-powered consumer engagement strategies.
In the fiscal year 2020, Krafton’s revenue hit 1.67 trillion won with its operating profit vaulting up to 774 billion won—a two-fold increase from 2019.
The Korean IPO scene is buzzing with activity, with predictions of total capital raises reaching around 20 trillion won in 2021—quadrupling the figures from the previous year. The surge in interest among investors stems from the nation’s swift economic recovery, low-interest climate, and the soaring Kospi index.
A financial analyst Choi Jong-kyung underscored this year’s exceptional concentration of significant new market entries on the Kospi, with valuations reaching into the tens of trillions of won. Meanwhile, an investment banking insider acknowledged Krafton’s potential pull amongst investors, highlighting burgeoning sectors like electric vehicle batteries, gaming, and digital platforms as key motivators. Yet, they also pointed out the risks tied to Krafton’s overreliance on a single game’s lasting appeal.
Despite the excitement surrounding the IPO, some market analysts have raised concerns about the valuation, considering it steep when pitted against other industry players who boast higher revenues yet lower market caps.
The genesis of Krafton can be traced back to 2007, established by Chang Byung-gyu and originally known as Bluehole. Over the years, the massive success of PUBG, released in 2017, has significantly contributed to the company’s revenue streams. As the IPO draws closer, Mirae Asset Securities takes the helm as the leading advisor, with Credit Suisse, NH Investment & Securities, Citigroup, and JP Morgan also providing guidance.
