[비즈한국] Krafton, the game developer that created the success myth of the first-person shooter game PlayerUnknown's Battlegrounds (PUBG), has officially kicked off its initial public offering (IPO) by filing for a preliminary stock exchange listing review with the Korea Exchange on the 8th. The market had already been heating up well before this. Trading for Krafton shares, which were previously trading for less than 2 million won, has surged to around 2.5 million won in the over-the-counter (OTC) market. Listed companies that invested in Krafton, such as Neptune217270, are also seeing their stock prices skyrocket.
Expectations for Krafton are substantial, as it is moving faster than the initial forecast of an "end-of-year listing." It is one of the biggest IPOs this year. Since PUBG is one of the most popular games in PC bangs (internet cafes), it is being valued on par with Nexon, NCSoft036570, and Netmarble251270. The market is already evaluating the company at 20 trillion to 30 trillion won, with its market capitalization already exceeding 20 trillion won.
Investment industry experts note that it is important to pay attention to the fact that the majority of Krafton's existing shares are held by venture capital (VC) firms. Even after the listing, the public offering size is expected to be around 10%, which is further driving up Krafton's valuation. However, the fact that it is a "one-hit game company" dependent solely on PUBG is a risk factor. Considering this, Krafton plans to release "PUBG: New State" within this year to target markets such as North America.
Big hit in revenue and operating profit... Valuations reaching 30 trillion won
Krafton is a game developer that was formerly known as Bluehole, founded in 2007. It demonstrated its presence after its subsidiary, PUBG, launched the online shooter "Battlegrounds" in 2017, which gained massive worldwide popularity. Success with the mobile version of PUBG further propelled its performance.
Krafton's consolidated revenue last year was 1.6704 trillion won, with an operating profit of 773.9 billion won. Its operating profit ranks third, following Nexon (1.1907 trillion won) and NCSoft (824.8 billion won), and is more than double that of Netmarble (272 billion won).
Although an IPO was originally expected sometime this year, Krafton has begun moving quickly. By filing for a preliminary review with the Korea Exchange on the 8th, it has officially launched the IPO process. Considering that the preliminary review must be completed within 45 days, the company is expected to enter the public offering stage by July or August at the latest.
Expectations for Krafton in the OTC market are considerable. As of the afternoon of the 9th, on the OTC trading site 38 Communications, shares were trading at 2.35 million won per share, up 50,000 won (2.17%) from the previous trading day. This is a sharp rise from early March, when it was trading in the 1.8 million won range. On 38 Communications, posts such as, "Even if you say you will buy at 2.5 million won, sellers are suddenly changing their minds and refusing to sell, so you should consider the actual trading price to be around 2.6 to 2.7 million won," can be frequently seen. Krafton's market capitalization in the OTC market already exceeds 20 trillion won, and there is significant anticipation in the investment industry that it "could even surpass 30 trillion won." This easily exceeds the valuation of Kakao Games (in the 4 trillion won range), which caused a sensation with its IPO subscription last year.
Naturally, the stock prices of Neptune and AJU IB Investment027360, which hold stakes in Krafton, are also on the rise. Neptune, which was trading at around 5,000 won in April of last year, is now in the 28,000 won range, and AJU IB Investment, which was trading in the 1,100 won range, is now at the 8,500 won level. Although both companies hold less than a 5% stake in Krafton, analysts say market expectations are being reflected in their stock prices.
Key point: Most existing shares are owned by VCs
The investment industry explains that it is important to note that most of Krafton's existing shares are held by VCs and other management firms. This suggests that there may not be many shares available for immediate trading once the company is listed.
Currently, Krafton's largest shareholder is Chairman Chang Byung-gyu, who holds a 16.43% stake. Image Frame Investment, a subsidiary of Tencent, holds 15.52%; Belize One, a private equity fund co-founded by Chairman Chang and IMM Investment, holds 6.47%; and the KNET Culture Contents Professional Investment Fund holds 5.38%. Aside from these, the volume of shares available for trading by investment firms and others is in the low 20% range, and the public offering size for the stock exchange listing is expected to be around 10%, which is another reason driving up Krafton's OTC price. An investment industry source hinted, "Except for the new shares recently issued by IMM Investment, most of the existing shares belong to VCs."
The lack of a successor to PUBG is a challenge Krafton must solve. While it is striving to diversify its game lineup, a revenue structure concentrated on PUBG is problematic. In fact, within the Krafton conglomerate, most subsidiaries besides PUBG are in the red, and Schol, which developed Tera M, eventually shut down. The suspension of PUBG Mobile services in India late last year due to the conflict between China and India was also a major blow to revenue.
Therefore, Krafton plans to release "PUBG: New State" this year to break away from the "one-game risk." It is targeting the North American and European markets, and Krafton aims to make "PUBG: New State" a hit in line with its IPO schedule.
An IB market source explained, "It is safe to say that Krafton is the most popular among IPOs in the second and third quarters of this year," adding, "Everyone is paying close attention to Krafton's post-listing stock performance, as the volume of available shares will be low."