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.

Equity Capital Markets

<ul>
<li>The institutional demand forecasts were much worse than expected, leading to the company’s blunt admission in the latest filing that the book-building flopped, prompting them to cancel the IPO.</li>
<li>Bankers NH and KB suggested an offering price below 8,500 KRW, but pre-IPO backers like Bain Capital and MBK strongly opposed, unhappy with shrinking proceeds, pushing for cancellation.</li>
<li>K-Bank plans to regroup and adjust the heavy 50% secondary share portion to retry the IPO in six months before their prelim review window expires.</li>
</ul>


The institutional demand forecasts were much worse than expected, leading to the company’s blunt admission in the latest filing that the book-building flopped, prompting them to cancel the IPO.
Bankers NH and KB suggested an offering price below 8,500 KRW, but pre-IPO backers like Bain Capital and MBK strongly opposed, unhappy with shrinking proceeds, pushing for cancellation.
K-Bank plans to regroup and adjust the heavy 50% secondary share portion to retry the IPO in six months before their prelim review window expires.


K-Bank's IPO Cancellation: What Led to This Move and Plan for a Comeback

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

<ul>
<li>Chosun Business Daily mentioned that K Bank IPO book building results among institutional investors have been very poor so far. </li>
<li>As a result, the bankers and K Bank are currently considering on potentially reducing the IPO price to about 8,500 won or even cancelling the IPO altogether. </li>
<li>Our base case valuation of K Bank is target price of 9,151 won per share. Even if the IPO is priced at 8,500 won, we would pass on this IPO.</li>
</ul>


Chosun Business Daily mentioned that K Bank IPO book building results among institutional investors have been very poor so far. 
As a result, the bankers and K Bank are currently considering on potentially reducing the IPO price to about 8,500 won or even cancelling the IPO altogether. 
Our base case valuation of K Bank is target price of 9,151 won per share. Even if the IPO is priced at 8,500 won, we would pass on this IPO.


K Bank IPO Bookbuilding: To Price Lower than Low IPO Price Range or Even Potential Cancellation

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/k-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:36073:1" rel="noopener">K Bank (279570 KS)</a> plans to raise up to US$740m in its upcoming South Korean IPO. </li>
<li>K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.</li>
<li>In our previous note, we have looked at the company’s past performance and undertaken a peer comparison. In this note, we will talk about valuations.</li>
</ul>



K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO. 
K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
In our previous note, we have looked at the company’s past performance and undertaken a peer comparison. In this note, we will talk about valuations.


K Bank IPO - Should Price Below Its Range

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/k-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:36073:1" rel="noopener">K Bank (279570 KS)</a> is looking to raise up to KRW 984bn (US$738m), valuing the company at KRW 5tn (US$3.75bn) at the top end of the IPO price range.</li>
<li>Close peer <a href="https://www.smartkarma.com/entities/kakaobank-corp" target="_blank" data-smartkarma-citation="entities:33501:1" rel="noopener">KakaoBank (323410 KS)</a> and regional peer <a href="https://www.smartkarma.com/entities/sbi-sumishin-net-bank-ltd" target="_blank" data-smartkarma-citation="entities:34572:1" rel="noopener">SBI Sumishin Net Bank (7163 JP)</a> have been trading lower recently and the IPO could price lower than the top end.</li>
<li>The change in <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">KOSPI2 INDEX</a> Fast Entry rules will leave the stock out of the index till June 2025. Inclusion in global indices will have to wait a while too.</li>
</ul>



K Bank (279570 KS) is looking to raise up to KRW 984bn (US$738m), valuing the company at KRW 5tn (US$3.75bn) at the top end of the IPO price range.
Close peer KakaoBank (323410 KS) and regional peer SBI Sumishin Net Bank (7163 JP) have been trading lower recently and the IPO could price lower than the top end.
The change in KOSPI2 INDEX Fast Entry rules will leave the stock out of the index till June 2025. Inclusion in global indices will have to wait a while too.


K Bank IPO (279570 KS): Index Inclusion Timeline

<ul>
<li>Besides ranking in the top 50 by market cap, it must also meet a minimum float-adjusted cap for K200 fast entry: at least 50% of the 50th-ranked stock's market cap.</li>
<li>Even if new stocks meet KRX’s float cap, their actual float share volume may still be low, risking inflation from local pension funds' preemptive passive inflows post-listing.</li>
<li>This could reduce predictability for KOSPI 200 fast entry, increasing price swings post-listing and forcing traders to develop new volatility strategies after IPOs.</li>
</ul>


Besides ranking in the top 50 by market cap, it must also meet a minimum float-adjusted cap for K200 fast entry: at least 50% of the 50th-ranked stock's market cap.
Even if new stocks meet KRX’s float cap, their actual float share volume may still be low, risking inflation from local pension funds' preemptive passive inflows post-listing.
This could reduce predictability for KOSPI 200 fast entry, increasing price swings post-listing and forcing traders to develop new volatility strategies after IPOs.


New Fast Entry Rule for KOSPI 200 & KOSDAQ 150: Post-IPO Price Swings Ramping Up

South Korea

K Bank Co. Ltd. operates banking businesses. The Company provides deposits, withdrawals, loans, and other services. K Bank conducts businesses in South Korea.

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K Bank (279570 KS)

K-Bank's IPO Cancellation: What Led to This Move and Plan for a Comeback

This post details K-Bank's decision to cancel its listing: background behind the decision and future plans for re-attempt.

Sanghyun Park

K Bank IPO Bookbuilding: To Price Lower than Low IPO Price Range or Even Potential Cancellation

K Bank IPO book building results among institutional investors has been very poor so far. K Bank is considering on reducing the IPO price to about...

Douglas Kim

K Bank IPO - Should Price Below Its Range

K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO. In this note, we talk about the IPO valuations.

Sumeet Singh

K Bank IPO (279570 KS): Index Inclusion Timeline

K Bank is looking to raise up to US$738m, valuing the company at US$3.75bn at the top end of the IPO range. Inclusion in the KOSPI200 and global...

Brian Freitas

New Fast Entry Rule for KOSPI 200 & KOSDAQ 150: Post-IPO Price Swings Ramping Up

This post explores how traders need to reshape their setups with the float market cap requirements now in play for fast entries into KOSPI 200 and...

Sanghyun Park

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