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Ahead of mega IPOs in coming days in S. Korea, controversy of overvaluation rises
Updated: 2021-08-05 09:35:08 KST
A blockbuster IPO is coming up this Friday,… August 6th for South Korea's largest internet-only bank, Kakaobank, run by South Korea's dominant chat application operator Kakao.
Some 1.9 million people bid for shares during the 2-day subscription period and poured in some 50 billion dollars into retail orders.
Although competition was high, the response it got from retail investors was not as hot as previous IPOs.
The amount of subscription deposits made was the fifth largest for a local IPO, but was far less than those of other big-name companies that went public earlier this year, including SK IE Technology and SK Bioscience.
And due to the recent surge in COVID-19, brokerage houses were relatively empty.

"Due to the recent surge in COVID-19 infections in the country, some brokerage firms are limiting the number of customers who can enter the lounge at once and many retail investors are applying online."

Also, there was some controversy as some said the projected corporate valuation seemed much higher than its true worth.
That's because a relatively small venture in terms of asset size and earnings would become one of the largest financial institutions in the country right after listing.
Experts say, as the price is overvalued, Kakaobank is unlikely to see the dramatic price rises that previous IPOs saw in their first days on the KOSPI.
There was also controversy surrounding the IPO price for one of South Korea's biggest game makers,… Krafton.
The 2-day public subscription for the game developer behind global blockbuster "PlayerUnknown's Battlegrounds" ended on Tuesday but the sales of shares were disappointing.
Orders came to merely 8 times the amount of shares made available, significantly lower than Kakaobank, which had 183 orders per share, or Kakao Games with 1,525 orders per share.

"The biggest reason for the overvaluation is that 90 percent of its sales are coming from only one game, "PlayerUnknown's Battlegrounds." I encourage people to sell the shares as soon as the market starts on the first day of going public because the price is overvalued."

But he added that investors should look forward to some other big IPOs that are also coming up in the near future including Kakao Pay, Kakao Mobility and LG Energy Solution.
Eum Ji-young, Arirang News.
Reporter : jy_rachel@arirang.com