Famous game publisher Krafton is looking to raise around $5 billion in IPO that is going to take place around July 2021. The South Korean gaming giant is all set to become the most valuable local game company according to their latest revenue claim. Back in April Krafton filed for IPO which promised big investments from various sources. The popularity of the gaming brand hit an all-time high with its launch of the market defying Battle Royal game – PUBG. PlayerUnknown’s Battleground is a Massively Multiplayer Online game following the rules of Battle Royal mod which was an instant success post its launch in March 2017. It went on to become Korea’s most played game of the year and continued to spread in popularity in other countries as well.
| Krafton Inc is founded by its parent company Bluehole in November 2018. It was initially launched as a video game holding company. |
| The CEO of Krafton Inc Kim Chang-Han is determined to make Krafton bigger than a “one-hit wonder”. |
How Much Can Krafton Raise In This IPO?
Krafton is quite hopeful to raise around $4 to $5 billion in the upcoming IPO due to the high demands of its shares post PUBG release. The IPO is going to be held in the Korean exchange which is anticipating its largest market debut till this date. The South Korean game publisher is all set to take on the No 1 spot in the Korean gaming front clinching past local rivals NCSoft and Netmarble. With the estimated high share prices and confirmed list of proceedings, there is little doubt about the success that is to come shortly. Krafton will be looking for more opportunities in terms of acquisitions and mergers following their success in the IPO.
Earlier this year, few gaming companies underwent IPO to gather more investments. Playtika, Roblox are few notable mentions among them. The former had a good market value surge post the IPO. Mainly with the onset of the pandemic, most gaming companies are looking to go public to increase their market capitalization and growth. PUBG maker Krafton is also eyeing the same prize. But the exception here is the market cap of Krafton in the upcoming IPO. Krafton will be floating over 10 million of its share for the public offering. The share prices are set at around $405 each which is sure to boost up its overall market value.
| According to the latest news, the Financial Supervisory Service (FSS) has requested Krafton to resubmit its IPO registration statement. FSS has asked Krafton for an IPO target adjustment. |
| After a careful downward revision of the IPO target, Krafton is hopeful to raise a minimum of $3.09 billion from the IPO. |
What Is The Expected Outcome Of This IPO?
The Initial Public Offering target set by Krafton is all set to break previous records in terms of revenue raised in Korea’s capital market history. Krafton will be looking to reach a market capitalization of $24 billion following the grand IPO. The tentative date of the IPO listing is set for July 22. With this huge expected debut, Krafton can very well beat the record for the biggest IPO debut among the South Korean companies which is held by Coupang Inc.
Previously this year the South Korean company raised around $4.6 billion. Krafton is also hopeful to beat the record of the largest listing on the domestic exchange of Korea. Samsung Life Insurance raised around $4.3 billion back in 2010 in an IPO on Korea’s domestic exchange.
The IPO of Krafton will be arranged by Mirae Asset Daewoo as the arranger. Krafton has also hired Credit Suisse Group AG, Citigroup Inc, JP Morgan, and NH investment to be the co-arrangers in this upcoming IPO. With the expected success of the IPO, Krafton founder Chang Byung-Gyu is set to hold a 14 percent stake in the company. Following Chang, the next highest stakeholder at Krafton will be Tencent Holding with a 13.2 percent share held through a subsidiary.
As a result of this IPO Krafton aims to shine even brighter among the South Korean Game publishers. With loads of new investments from public sources, Krafton will be looking to break the stigma of one-game wonder. The IPO will be responsible for bringing a major impact on upcoming gaming IPOs and encourage other game publishers to come forward and go public.
How Krafton Will Be Benefitted From The IPO?
Before the announcement of going public, Krafton was already an established name in the array of gaming giants. The company achieved this feat majorly because of the success of its battle royal superhit PUBG. The massively multiplayer online game stormed the Asian market and took everyone by surprise. The console and PC version of the game has already sold over 75 million copies in the market. This makes the game one of the highest-grossing titles in the last three years. Also, the mobile counterpart of PUBG has already crossed the landmark of 1 million downloads across the globe. The launch of PUBG mobile has been the pioneer of the mobile gaming revolution in the South East Asian countries.
But there are certain areas in which the South Korean game publishers look to improve on. For instance, the company is too much dependent on its record-breaking title for the majority of its revenue generation. Even last year’s total revenue was almost entirely comprised of sales from PUBG. As a result, the stigma of one game company is inevitable. Krafton is therefore eager to raise more investments following the IPO and use them to launch a few games of its own. The upcoming calendar shows plans for several game launches. The IPO holds significant importance for Krafton to materialize those plans.
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Krafton Acquiring Content Platforms
Krafton also looks forward to acquiring multiple content platform providers with the money generated in the proceeds. According to various sources Krafton plans to invest in minority takes for the next three years in a move to maximize the enterprise value in the upcoming period. Out of the 10 million shares that Krafton is issuing for public offering, around 7 million will be new shares.
Existing shareholders will issue the rest of the shares. Thus around 70 percent of the IPO proceeds will directly benefit Krafton. The majority of the remaining proceeds will contribute to increasing foreign market presence. Krafton will be looking to acquire more grounds in foreign markets and thus look for real estate for possible relocations. The South Korean publishers are also reportedly looking to expand in the field of artificial intelligence and deep learning to come up with more entertaining games.
Details Of The IPO
The South Korean game publishers filed the IPO listing back in April shortly after gaining approval to list on Kospi, the main board of KRX. Krafton will be looking for bids from both institutional investors and retail investors. PUBG makers will be listing 10 million shares out of which 7 will be new shares and 3 from existing shareholders. The price of each share is estimated to be around 450000 won to 557000 won. Krafton will decide the final price on July 9. The company will be gauging the interest of the institutional investors till July 9 by holding a book-building process. Post this inspection the final IPO price will be decided. The retail investors are likely to start bidding from July 14-15.
| Expected IPO date | 22 JULY 2021 |
| Expected IPO price | 450000 won – 557000 won |
| Projected IPO raise | 5.6 trillion won |
| Projected Market cap | 28 trillion won |
An IPO is generally responsible for the company to gain investments from outside. This opens the doors of possibilities for the company to expand and acquire more business areas. By listing an IPO a company looks to raise its market value by a certain margin. This invites investments from various sources including institutional investors and retail investors. Krafton also has the same ideology behind going public this year. According to data, other Korean firms listed on the KRX have already fetched around 5.5 trillion won this year in IPO proceeds. Krafton is all set to nearly double that with the upcoming IPO proceeds.
Conclusion
Krafton is already a massive name among the game publishing giants of the world. With the upcoming projected IPO proceeds, Krafton is well set to dominate both the domestic and overseas gaming market. Many expect the IPO to yield positive results for the South Korean game publishers. And give them the extra push they need to execute their plans for the future. The gaming revolution is very much near as more and more Game publishers are looking to publicize. The fate of Krafton’s upcoming IPO will contribute largely to deciding the future of gaming in the post-pandemic world.
