Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a> plans to raise around US$2.5bn via selling a mix of primary and secondary shares in its India IPO. The company is backed by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> (<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>), <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and counts <a href="https://www.smartkarma.com/entities/berkshire-hathaway-inc-cl-a" target="_blank" data-smartkarma-citation="entities:1044:1" rel="noopener">Berkshire Hathaway Inc Cl A (BRK/A US)</a> among its investors.</p></div><div><p>Paytm offers payment services, commerce and cloud services, and financial services to 333m consumers and over 21m merchants, as of Mar 21. It offers consumers a wide selection of payment options on the Paytm app. It also offers merchants solutions that allow them to accept payments, acquire and retain consumers, improve their business operations and access financial services.</p></div><div><p>We covered the deal background in our earlier notes:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/paytm-one-97-pre-ipo-the-positives-will-be-one-of-india-s-largest-ipos" target="_blank" rel="noopener">Paytm (One 97) Pre-IPO - The Positives - Will Be One of India’s Largest IPOs</a></li>
<li><a href="https://www.smartkarma.com/insights/paytm-one-97-pre-ipo-the-negatives-asking-valuations-a-long-shot" target="_blank" rel="noopener">Paytm (One 97) Pre-IPO - The Negatives - Asking Valuations a Long Shot</a></li>
<li><a href="https://www.smartkarma.com/insights/paytm-one-97-ipo-rhp-updates-better-disclosures-signs-of-turning-around" target="_blank" rel="noopener">Paytm (One 97) IPO - RHP Updates - Better Disclosures, Signs of Turning Around</a></li>
</ul></div><div><p>In this note, we will talk about the valuations.</p></div>

Paytm (PAYTM IN) plans to raise around US$2.5bn via selling a mix of primary and secondary shares in its India IPO. The company is backed by Ant Financial Services Group (6688 HK) (Alibaba Group (BABA US)), Softbank Group (9984 JP) and counts Berkshire Hathaway Inc Cl A (BRK/A US) among its investors.Paytm offers payment services, commerce and cloud services, and financial services to 333m consumers and over 21m merchants, as of Mar 21. It offers consumers a wide selection of payment options on the Paytm app. It also offers merchants solutions that allow them to accept payments, acquire and retain consumers, improve their business operations and access financial services.We covered the deal background in our earlier notes:
Paytm (One 97) Pre-IPO - The Positives - Will Be One of India’s Largest IPOs
Paytm (One 97) Pre-IPO - The Negatives - Asking Valuations a Long Shot
Paytm (One 97) IPO - RHP Updates - Better Disclosures, Signs of Turning Around
In this note, we will talk about the valuations.

Paytm IPO - Still Needs a Whole Lot of Hope to Justify Valuation. Index Might Hold It up Briefly

<div><p><a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a> plans to raise around US$2.5bn via selling a mix of primary and secondary shares in its India IPO. The company is backed by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> (<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group (BABA US)</a>), <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and counts <a href="https://www.smartkarma.com/entities/berkshire-hathaway-inc-cl-a" target="_blank" data-smartkarma-citation="entities:1044:1" rel="noopener">Berkshire Hathaway Inc Cl A (BRK/A US)</a> among its investors.</p></div><div><p>Paytm offers payment services, commerce and cloud services, and financial services to 333m consumers and over 21m merchants, as of Mar 21. It offers consumers a wide selection of payment options on the Paytm app. It also offers merchants solutions that allow them to accept payments, acquire and retain consumers, improve their business operations and access financial services.</p></div><div>
<p>We covered the deal background in our earlier notes:</p>
<ul>
<li><a href="https://www.smartkarma.com/insights/paytm-one-97-pre-ipo-the-positives-will-be-one-of-india-s-largest-ipos" target="_blank" rel="noopener">Paytm (One 97) Pre-IPO - The Positives - Will Be One of India’s Largest IPOs</a></li>
<li><a href="https://www.smartkarma.com/insights/paytm-one-97-pre-ipo-the-negatives-asking-valuations-a-long-shot" target="_blank" rel="noopener">Paytm (One 97) Pre-IPO - The Negatives - Asking Valuations a Long Shot</a></li>
</ul>
</div><div><p>In this note, we will talk about the updates since our last note.</p></div>

Paytm (PAYTM IN) plans to raise around US$2.5bn via selling a mix of primary and secondary shares in its India IPO. The company is backed by Ant Financial Services Group (6688 HK) (Alibaba Group (BABA US)), Softbank Group (9984 JP) and counts Berkshire Hathaway Inc Cl A (BRK/A US) among its investors.Paytm offers payment services, commerce and cloud services, and financial services to 333m consumers and over 21m merchants, as of Mar 21. It offers consumers a wide selection of payment options on the Paytm app. It also offers merchants solutions that allow them to accept payments, acquire and retain consumers, improve their business operations and access financial services.
We covered the deal background in our earlier notes:

Paytm (One 97) Pre-IPO - The Positives - Will Be One of India’s Largest IPOs
Paytm (One 97) Pre-IPO - The Negatives - Asking Valuations a Long Shot

In this note, we will talk about the updates since our last note.

Paytm (One 97) IPO - RHP Updates - Better Disclosures, Signs of Turning Around

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Order tableThe final institutional subscription rate of Kakao Pay was 1,714.47 to 1. It is close to the historical high of SKIET (1,883 to 1).There is a notable pattern in this bookbuilding. Foreign institutions account for more than 10% of the number of institutions. However, they do not exceed 4% based on the order volume. It is because most of the local institutions placed the maximum order to secure as many as possible. Of course, this pattern isn't unfamiliar at all, but it's gotten worse in this event.









By investor type
Institution
%
Demand
%


1. Local publicly raised funds
615
39.81%
7,086,056,400
44.20%


2. Local brokerages/investment advisories
32
2.07%
340,522,933
2.12%


3. Local pensions, funds managing proprietary assets, banks, and insurance companies
248
16.05%
2,827,447,500
17.64%


4. Local - Other (discretionary investment companies, primarily local hedge funds)
462
29.90%
5,223,138,145
32.58%


5. Foreign (foreign IPO funds &amp; hedge funds)
166
10.74%
285,333,793
1.78%


6. Foreign - Other (mostly local hot money)
22
1.42%
267,757,000
1.67%


Total
1,545
100.00%
16,030,255,771
100.00%


Subscription rate
1,714.47

Source: DART

There seem to be three explanations that local institutions rushed to this IPO like this.
First, the IPO price of Kakao Pay may have provided valuation merit.
Second, in terms of demand interference within the same corporate group and within the same sector, there might have been many local institutions that wanted to include Kakao Pay in their portfolios rather than Kakao Bank.
Third, Kakao Pay is the last mega IPO of this year in a situation where LGES's listing within this year has gone awry, so the competition between local IPO funds that have not yet achieved satisfactory results may have erupted this time.
This reasoning is evidenced by the fact that 100% of the orders are above 75% of the upper end. The "Unspecified" is generally considered "Above the upper end" in Korea's local IPO bookbuildings.









By price
Institution
%
Demand
%


Above high end
446
28.87%
5,205,975,000
32.48%


75-100% of high end
1,029
66.60%
10,219,345,229
63.75%


50-75% of high end
0
0.00%
0
0.00%


25-50% of high end
0
0.00%
0
0.00%


0-25% of high end
0
0.00%
0
0.00%


Median
0
0.00%
0
0.00%


75-100% of median
0
0.00%
0
0.00%


50-75% of median
0
0.00%
0
0.00%


25-50% of median
0
0.00%
0
0.00%


0-25% of median
4
0.26%
1,453,942
0.01%


Low end or below
0
0.00%
0
0.00%


Unspecified
66
4.27%
603,481,600
3.76%


Total
1,545
100.00%
16,030,255,771
100.00%

Source: DART

Regardless of whether the holding tendencies are long-term or short-term, all institutions have been pricing fairly aggressively. It shows once again that there is fierce competition among institutions to secure the target allocation volume.








Institution type
Above 75% of the upper end + Unspecified
% of total demands
Holding tendencies


1. Local publicly raised funds
100.00%
44.20%
Long-term


2. Local brokerages/investment advisories
100.00%
2.12%
Short-term


3. Local pensions, funds managing proprietary assets, banks, and insurance companies
100.00%
17.64%
Long-term


4. Local - Other (discretionary investment companies, primarily local hedge funds)
100.00%
32.58%
Short-term


5. Foreign (foreign IPO funds &amp; hedge funds)
97.59%
1.77%
Long or short-term, depends


6. Foreign - Other (mostly local hot money)
100.00%
1.67%
Short-term

Source: DART

Additional data:The order table for each institutional type is below.The daily bookbuilding participation quantity is as follows.

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Equity Bottom-Up

<div>There is a saying in Korea that amounts to master/servant and it's something that even in Korea is now said quietly away from the spotlight.  I bring this up as <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> and <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>  have been under heavy scrutiny for their monopoly position which has led to many regulation changes (and more to come) to level the playing field.  If <a href="https://www.smartkarma.com/entities/coupang-inc" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a>  was nervous and hoped the attention was focused solely on Kakao and Naver well, they were sadly mistaken.</div>

There is a saying in Korea that amounts to master/servant and it's something that even in Korea is now said quietly away from the spotlight.  I bring this up as Naver Corp (035420 KS) and Kakao Corp (035720 KS)  have been under heavy scrutiny for their monopoly position which has led to many regulation changes (and more to come) to level the playing field.  If Coupang (CPNG US)  was nervous and hoped the attention was focused solely on Kakao and Naver well, they were sadly mistaken.

Coupang's Rights Offering - Cash Burn to Increase

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p>After multiple delays, the book-building period for the <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (377300 KS)</a> IPO started today (20<sup>th</sup> October 2021) at an offer price range of 60,000-90,000 won per share.</p><p>Tightening regulations on fintech and internet platforms in South Korea has somewhat dampened the investor enthusiasm towards fintech and internet platforms. <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> have lost 17.7% and 7.2% of their respective market caps since Kakao Pay revised down its IPO price range by 4.8-6.3% to 60,000-90,000 won per share on 31<sup>st</sup> August 2021.</p><p>Therefore, we are expecting subdued investor interest in the Kakao Pay IPO near the top end of the offer range. Nevertheless, we see value in Kakao Pay’s financial services business in the long term.</p>

After multiple delays, the book-building period for the Kakao Pay (377300 KS) IPO started today (20th October 2021) at an offer price range of 60,000-90,000 won per share.Tightening regulations on fintech and internet platforms in South Korea has somewhat dampened the investor enthusiasm towards fintech and internet platforms. Kakao Corp (035720 KS) and Naver Corp (035420 KS) have lost 17.7% and 7.2% of their respective market caps since Kakao Pay revised down its IPO price range by 4.8-6.3% to 60,000-90,000 won per share on 31st August 2021.Therefore, we are expecting subdued investor interest in the Kakao Pay IPO near the top end of the offer range. Nevertheless, we see value in Kakao Pay’s financial services business in the long term.

South Korea

Kakao Corp. provides Internet portal services such as news, free e-mail, and leisure information.  The Company also offers cross-platform mobile messaging application that allows users to exchange messages.

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Kakao Corp (035720 KS)

Paytm IPO - Still Needs a Whole Lot of Hope to Justify Valuation. Index Might Hold It up Briefly

Paytm (PAYTM IN) plans to raise around US$2.5bn in its India IPO. The company is backed by Ant Fin (Alibaba Group (BABA US)), Softbank Group (9984...

Sumeet Singh

Paytm (One 97) IPO - RHP Updates - Better Disclosures, Signs of Turning Around

Paytm (PAYTM IN) plans to raise around US$2.5bn in its India IPO. The company is backed by Ant Fin, Softbank Group (9984 JP) and counts Berkshire...

Sumeet Singh

Kakao Pay Bookbuilding: Detailed Results

This post details and explains Kakao Pay's extremely successful bookbuilding results, officially published on DART late last Friday.

Sanghyun Park

Coupang's Rights Offering - Cash Burn to Increase

Ahead of Coupang's 3Q earnings, we will need to focus on days turnover for payables and of course the spend on new businesses.

Ken S. Kim

Kakao Pay IPO: Valuation

With regulations surrounding fintech and internet platforms in South Korea starting to tighten, investors are showing less enthusiasm and seem...

Oshadhi Kumarasiri

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