[비즈한국] Various speculations are circulating regarding the initial public offering (IPO) of Viva Republica, the operator of Toss. While it was previously reported that Viva Republica was pursuing a listing on the U.S. Nasdaq, it is now also reviewing the domestic market, having recently inquired with financial authorities about listing-related procedures. The U.S. market is known to offer more generous valuations for fintech companies compared to the Korean market. However, with the KOSPI index recently showing an upward trend and public sentiment toward overseas listings becoming unfavorable following the Coupang incident, analysts suggest that a Nasdaq listing may not necessarily be the only answer.
It has been known that Viva Republica has been pursuing a Nasdaq listing for several years. After expressing its intention to halt domestic listing plans to its IPO underwriters in 2024, the company selected global investment banks (IBs) like JP Morgan as lead underwriters and began recruiting relevant personnel.
At the time, concerns about the domestic stock market were significant, with terms like "Korea Discount" gaining traction, and the U.S. market tended to value fintech firms more favorably. Furthermore, if the company's valuation after listing failed to meet expectations, avoiding backlash from domestic investors would be difficult. Additionally, apart from CEO Lee Seung-gun, the major shareholders of Viva Republica are U.S.-based funds. It is interpreted that this background influenced Viva Republica's consideration of a Nasdaq listing.
However, the situation has changed recently. Since the KOSPI index surpassed 6000 last February, perceptions of the domestic stock market have also turned positive. In particular, the share prices of financial stocks, including financial holding companies, have surged. Moreover, public opinion regarding domestic companies listing in the U.S. has soured following the Coupang incident.
It is difficult to say that Viva Republica has achieved remarkable success overseas thus far. In 2023, it liquidated its local subsidiaries in Vietnam and Singapore. Although it re-established a 'Toss Securities Global' subsidiary in Singapore last year, no tangible results have emerged yet.
For this reason, some in the securities industry predict that Viva Republica may once again pursue a KOSPI listing. According to the financial sector, Viva Republica recently inquired with the Financial Supervisory Service (FSS) about guidelines such as the application for a designated auditor and the allocation process for domestic listing preparations. If Viva Republica re-pursues a KOSPI listing, it is expected to become a major IPO candidate in Korea.
The key question is whether Viva Republica can be recognized for an appropriate corporate valuation on the KOSPI. Viva Republica received 530 billion KRW in investment in 2022, at which time its recognized valuation was approximately 9 trillion KRW. In a paid-in capital increase in January of this year, which involved China's Ant Group, the price was set at 114,031 KRW per share. Based on a simple calculation from this, Viva Republica's corporate value approaches 20 trillion KRW. However, since this was a one-time investment from Ant Group, it is difficult to definitively state the value is 20 trillion KRW. Considering these factors, Viva Republica's valuation could be expected in the range of 10 to 20 trillion KRW.
A corporate value of 20 trillion KRW is on par with LG Electronics066570. LG Electronics far outperforms Viva Republica in terms of actual performance, such as revenue and operating profit. For Viva Republica to be recognized for such a valuation, it must demonstrate its future growth potential.
The outlook is generally positive for now. Yang Hee-chul, a researcher at Korea Investors Service, commented on Viva Republica: "Based on its rich user base and high customer loyalty, it has secured superior user metrics compared to competitors and holds a top-tier market position; we expect it to continue business expansion and top-line growth based on this. We anticipate a continued trend of profitability improvement in the medium term as the burden of fixed costs is gradually alleviated through rapid revenue growth driven by high-margin advertising income."
Some also suggest that Viva Republica might utilize American Depositary Receipts (ADRs). ADRs are financial certificates that allow shares of a company outside the U.S. to be traded on U.S. stock exchanges. Many financial holding companies, such as KB Financial Group105560, Shinhan Financial Group, and Woori Financial Group316140, have also issued ADRs to have their stocks traded in the U.S. market. Analysts suggest that since the U.S. market values fintech more highly than the domestic market, using ADRs could help boost the stock price. A Viva Republica official stated, "We are reviewing various options for a successful listing, but it is difficult to confirm any specific details."