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.

Event-Driven

<div>
<p>Kakao Bank's three month lock-up will end on 6th Nov 2021, freeing up another US$1bn worth of shares held by <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" data-smartkarma-citation="entities:22839:1" rel="noopener">Netmarble Corporation (251270 KS)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and local investors.</p>
<p>We have covered various aspects of the deal in our previous notes:</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/kakao-bank-ipo-riding-on-parent-s-network-but-boundaries-with-kakao-pay-remain-unclear" target="_blank" rel="noopener">Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear</a>, </li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-pricey-as-it-should-be" target="_blank" rel="noopener">Kakao Bank IPO - Pricey as It Should Be</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-lack-of-lock-up-and-msci-ftse-index-implications" target="_blank" rel="noopener">Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications, and</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-ipo-trading-one-for-instis-closer-look-at-ftse-and-msci-inclusion-remain-buyers" target="_blank" rel="noopener">Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-msci-done-missed-ftse-by-a-whisker" target="_blank" rel="noopener">Kakao Bank - MSCI Done, Missed FTSE by a Whisker</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-bank-placement-its-expensive-but-the-discount-is-enticing" target="_blank" rel="noopener">Kakao Bank Placement - Its Expensive but the Discount Is Enticing</a></li>
</ul>
</div>
<div>
<p>In this note, we will talk about the upcoming lock-up expiry.</p>
</div>


Kakao Bank's three month lock-up will end on 6th Nov 2021, freeing up another US$1bn worth of shares held by Netmarble Corporation (251270 KS), Tencent (700 HK) and local investors.
We have covered various aspects of the deal in our previous notes:




Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear, 
Kakao Bank IPO - Pricey as It Should Be
Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications, and
Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers
Kakao Bank - MSCI Done, Missed FTSE by a Whisker
Kakao Bank Placement - Its Expensive but the Discount Is Enticing



In this note, we will talk about the upcoming lock-up expiry.


Kakao Bank Lock-Up - Watch Out for Netmarble Led Blocks

Equity Capital Markets

<div><p>Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, raised 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><div><ul style="list-style-type: disc;">
<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>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-comparison-with-kakao-bank-and-an-alternate-look-at-valuation" target="_blank" rel="noopener">Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation</a></li>
</ul></div><p>In this note, we will talk about the deal's trading dynamics.</p>

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, raised 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 Announcement
Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment
Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation
In this note, we will talk about the deal's trading dynamics.

<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.

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.

Price Gauge
52-week Range	0.00 - 0.00
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Kakao Corp (035720 KS)

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

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

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