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>Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.</p></div><div><p>We have covered most aspects of the deal in our earlier notes:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-guided-by-ant-financial-to-be-a-mini-ant" target="_blank" rel="noopener">Kakao Pay IPO - Guided by Ant Financial to be a mini Ant,</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-peer-comparison-local-and-international" target="_blank" rel="noopener">Kakao Pay IPO - Peer comparison - local and international, and</a></li>
</ul></div><div><ul style="list-style-type: disc;"><li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-valuation-and-likely-impact-of-latest-announcement" target="_blank" rel="noopener">Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement</a></li></ul></div><ul><li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-low-end-still-appear-reasonable-but-stock-will-more-likely-be-driven-by-sentiment" target="_blank" rel="noopener">Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment</a></li></ul><div><p>In this note we will compare KP with its sister company, Kakao Bank.</p></div>

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.We have covered most aspects of the deal in our earlier notes:
Kakao Pay IPO - Guided by Ant Financial to be a mini Ant,
Kakao Pay IPO - Peer comparison - local and international, and
Kakao Pay IPO - Valuation and Likely Impact of Latest AnnouncementKakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by SentimentIn this note we will compare KP with its sister company, Kakao Bank.

Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<p>There were four new<a href="http://www.koreaherald.com/view.php?ud=20211013001007" target="_blank" rel="noopener"> metaverse related ETFs</a> were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:</p><p><strong>1) Tiger Fn Metaverse</strong> (managed by Mirae Asset Global Investment)</p><p><strong>2) KBSTAR iSelect Metaverse</strong> (managed by KB Asset Management)</p><p><strong>3) Hanaro Fn K-Metaverse MZ</strong> (managed by NH Amundi Asset Management)</p><p><strong>4) KODEX K-Metaverse Active</strong>  (managed by Samsung Asset Management)</p><p>The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs. </p>

There were four new metaverse related ETFs were launched in Korea on 13 October for the first time ever in the Korean stock market. The first three ETFs (KBSTAR iSelect Metaverse, Hanaro Fn K-Metaverse MZ, and Tiger Fn Metaverse) are passive funds. KODEX K-Metaverse Active is an active fund. These four new ETFs are as follows:1) Tiger Fn Metaverse (managed by Mirae Asset Global Investment)2) KBSTAR iSelect Metaverse (managed by KB Asset Management)3) Hanaro Fn K-Metaverse MZ (managed by NH Amundi Asset Management)4) KODEX K-Metaverse Active  (managed by Samsung Asset Management)The stocks that are included in these metaverse related names also tend to be higher beta ones that could perform much better in a rising market environment. However, because these stocks tend to be higher beta stocks with high valuation multiples, it could be challenging for these stocks to outperform the market when the market downturn occurs. 

Listing of 4 New Metaverse Related ETFs in Korea

<div><p>Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.</p></div><div></div><div>
<p>We have covered most aspects of the deal in our earlier notes:</p>
<ul>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-guided-by-ant-financial-to-be-a-mini-ant" target="_blank" rel="noopener">Kakao Pay IPO - Guided by Ant Financial to be a mini Ant, </a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-peer-comparison-local-and-international" target="_blank" rel="noopener">Kakao Pay IPO - Peer comparison - local and international, and</a></li>
</ul>
</div><ul><li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-valuation-and-likely-impact-of-latest-announcement" target="_blank" rel="noopener">Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement</a></li></ul><div><p>As the company is slated to be in front of investors again and finally launch its bookbuilding next week, in this note we will talk about the updates from the refiled prospectus and have a relook at valuations.</p></div>

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.
We have covered most aspects of the deal in our earlier notes:

Kakao Pay IPO - Guided by Ant Financial to be a mini Ant, 
Kakao Pay IPO - Peer comparison - local and international, and

Kakao Pay IPO - Valuation and Likely Impact of Latest AnnouncementAs the company is slated to be in front of investors again and finally launch its bookbuilding next week, in this note we will talk about the updates from the refiled prospectus and have a relook at valuations.

Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment

<p>DearU is another very interesting small cap IPO in Korea. DearU has enjoyed phenomenal sales growth rate and this company has figured out a way to monetize the huge popularity of K-Pop around the world. </p><p><a href="https://www.smartkarma.com/entities/dearu-co-ltd" target="_blank" data-smartkarma-citation="entities:34381:1" rel="noopener">DearU (376300 KS)</a> is getting ready to complete its IPO in Korea in the next several weeks. The IPO price of DearU is from 18,000 won to 24,000 won. The IPO base deal size is from $51 million to $68 million. According to the bankers' valuation, the expected market cap of the IPO is from 396 billion won to 528 billion won. The book building for the institutional investors starts on 25 October 2021. </p><p><a href="https://www.smartkarma.com/entities/dearu-co-ltd" target="_blank" data-smartkarma-citation="entities:34381:1" rel="noopener">DearU (376300 KS) </a>is a global fan messenger platform. The company's core platform is called DearU bubble which is a global fan messenger platform that has enhanced the communications among stars/artists and their fans. The company plans to capitalize on its strong global user base and IPO proceeds to expand into the metaverse platform, increase brand awareness, expand abroad, and include more top artists in the platform. </p><p><strong>Shareholding structure</strong> - The controlling shareholder of DearU is <a href="http://dart.fss.or.kr/dsaf001/main.do?rcpNo=20210817001014" target="_blank" rel="noopener">SM Studios</a> which own a 40.2% stake in the company. SM Studios is a subsidiary of SM Entertainment, the label which includes some of the top K-pop artists including Red Velvet, EXO, NCT, Girls Generation, TVXQ, and Super Junior. <a href="https://www.smartkarma.com/entities/s-m-entertainment-co" target="_blank" data-smartkarma-citation="entities:3500:1" rel="noopener">S.M.Entertainment Co (041510 KS)</a> owns a 100% stake in SM Studios.</p>

DearU is another very interesting small cap IPO in Korea. DearU has enjoyed phenomenal sales growth rate and this company has figured out a way to monetize the huge popularity of K-Pop around the world. DearU (376300 KS) is getting ready to complete its IPO in Korea in the next several weeks. The IPO price of DearU is from 18,000 won to 24,000 won. The IPO base deal size is from $51 million to $68 million. According to the bankers' valuation, the expected market cap of the IPO is from 396 billion won to 528 billion won. The book building for the institutional investors starts on 25 October 2021. DearU (376300 KS) is a global fan messenger platform. The company's core platform is called DearU bubble which is a global fan messenger platform that has enhanced the communications among stars/artists and their fans. The company plans to capitalize on its strong global user base and IPO proceeds to expand into the metaverse platform, increase brand awareness, expand abroad, and include more top artists in the platform. Shareholding structure - The controlling shareholder of DearU is SM Studios which own a 40.2% stake in the company. SM Studios is a subsidiary of SM Entertainment, the label which includes some of the top K-pop artists including Red Velvet, EXO, NCT, Girls Generation, TVXQ, and Super Junior. S.M.Entertainment Co (041510 KS) owns a 100% stake in SM Studios.

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.

<h2>Key revisions</h2><p>Kakao Pay submitted a revised registration statement (prospectus) on Friday afternoon. It plans to start bookbuilding on October 20-21 and subscription on the 25th. It then plans to go public in early November (tentatively November 3rd). However, Kakao Pay did not change the offering price.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/231/611/original/2.png?1632487425" class="editor-image img-responsive" data-smartkarma-image-id="231611"></figure></section><p>The grace period for the registration statement to take effect is 15 business days. During this period, the Financial Supervisory Service (FSS) will undergo a final review. An issuer cannot do marketing during the grace period. After 15 business days from today (September 24th), it becomes October 20th. So, the start date of bookbuilding was decided on October 20th.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/231/612/original/1.png?1632487478" class="editor-image img-responsive" data-smartkarma-image-id="231612"></figure></section><p>Contrary to expectations, Kakao Pay maintained its offering price at 60,000-90,000 won as before. The market capitalization based on the top of the indicative price band is 11.73 trillion won. The institutional allocation rate remains the same at 55-75%.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/231/613/original/3.png?1632487969" class="editor-image img-responsive" data-smartkarma-image-id="231613"></figure></section><p>Kakao Pay added government regulatory risk to this revised report. It stated that it had suspended those services that violated the Financial Consumer Protection Act (the services concluded as financial product brokerage, not advertising).</p><p>However, Kakao Pay explained that the portion of sales of the discontinued services was only 1.2% of the total sales. Therefore, Kakao Pay said it did not feel the need to change its IPO valuation (the offering price).</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/231/614/original/4.png?1632488385" class="editor-image img-responsive" data-smartkarma-image-id="231614"></figure></section>

Key revisionsKakao Pay submitted a revised registration statement (prospectus) on Friday afternoon. It plans to start bookbuilding on October 20-21 and subscription on the 25th. It then plans to go public in early November (tentatively November 3rd). However, Kakao Pay did not change the offering price.The grace period for the registration statement to take effect is 15 business days. During this period, the Financial Supervisory Service (FSS) will undergo a final review. An issuer cannot do marketing during the grace period. After 15 business days from today (September 24th), it becomes October 20th. So, the start date of bookbuilding was decided on October 20th.Contrary to expectations, Kakao Pay maintained its offering price at 60,000-90,000 won as before. The market capitalization based on the top of the indicative price band is 11.73 trillion won. The institutional allocation rate remains the same at 55-75%.Kakao Pay added government regulatory risk to this revised report. It stated that it had suspended those services that violated the Financial Consumer Protection Act (the services concluded as financial product brokerage, not advertising).However, Kakao Pay explained that the portion of sales of the discontinued services was only 1.2% of the total sales. Therefore, Kakao Pay said it did not feel the need to change its IPO valuation (the offering price).

Kakao Pay IPO Revised Prospectus Out: Key Revisions & Talking Points

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)

Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, aims to raise up to US$1.3bn in its South Korean IPO. In this...

Sumeet Singh

Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment

Kakao Pay aims to raise up to US$1.3bn in its South Korean IPO. In this note, we will look at the recent updates and revisit our valuation.

Sumeet Singh

DearU IPO Preview

DearU is another very interesting small cap IPO in Korea. It has enjoyed phenomenal sales growth rate and this company has figured out a way to...

Douglas Kim

Kakao Pay IPO Revised Prospectus Out: Key Revisions & Talking Points

Kakao Pay's revised prospectus is out afternoon today after the market closed. This post examines the key changes and main talking points.

Sanghyun Park

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